What are the different between the changes to the contract or change order and contract amendment?

Addendum vs Amendments

Addendum and Amendments are terms that are used widely in the real estate business. Most of the time, these terms create confusion among the buyers as they are not aware of their right application. When dealing with real estate issues, one should not be confused with addendum and amendments.

An amendment is more commonly used than an addendum.

In simple words, amendment means making changes in an already existing agreement. On the other hand, Addendum means including an additional document in the already existing one.

An amendment can also be called as correcting a document or improving the document. It can be also termed as an alteration to the original document. An amendment could also include supplementary information to the first document. It may include anything from price to vacating the house.

An Addendum is usually added to an existing document if something has been left out initially while drafting the document. An addendum is something that is added and made part of the original document only if it has been accepted by the concerned authorities. An Addendum is an informational or explanatory note of the requirements of the parties concerned that have not been specified in the original document.

Once the Addendum is accepted, it becomes a part of the whole agreement or document.

While an addendum becomes a part of the legal and binding contract, amendments are only part of a contract until negotiations.

 

An amendment can only be made by the persons who had signed the document. On the other hand, an Addendum can be made by any person as it is only an additional attachment to the existing document. An addendum would stand up in any court more than an amendment.

Summary

1. An amendment means changes made in an already existing agreement. On the other hand, an addendum means including an additional document in the already existing one.

2. While an addendum becomes a part of the legal and binding contract, amendments are only part of a contract until negotiations.

3. An amendment can also be called as correcting a document, improving the document, making alteration or including supplementary information to the first document. An Addendum is an informational or explanatory note of the requirements of the parties concerned that have not been specified in the original document.

4. An addendum is something that is added and made a part of the original document only if it has been accepted by the concerned authorities.

5. An amendment can only be made by the persons who had signed the document. On the other hand,an addendum can be made by any person as it is only an additional attachment to the existing document.

 

Say for an Example,

 

Managing Amendments and Change Orders

  Prior to the contract being signed there may be a number of addendums that are issued.An addendum changes information provided in a request for bid or request for proposals. That type of addendum is unilateral and does not require agreement by the parties. In the creation of the agreement you would capture any addendums that the contract is based upon.For example if you had a Request for Proposals dated July1,Issued Addendum1 on July, and Issued Addendum2 on July,, You would want to both incorporate those addendums into the agreement and establish an order of order of precedence would be:First to Addendum2 dated July,Then to Addendum1 dated July, and Finally the Request for Proposals Dated July1,That would establish the priority between those documents. Your agreement also needs to address the priority between those documents and the agreement and other documents that are incorporated into the agreement.One the contract is executed, any change to the contract may be done by either change orders or contract amendments. A change order is a unilateral change that requires advance agreement that the one party may make those unilateral changes subject to agreed parameters that usually include the scope of the change, the type of changes that can be ordered.It will usually establish a formula for how the cost of those changes will determined and how any schedule impact will be applied. For example in procurement of construction where there can be hundreds or thousands of changes that may need to be made to continue the progress of the work, owners commonly have the right to issue change orders.Amendments to the contract require the mutual agreement of the parties and many times contracts will define the specific requirements for any document to function as an amendment. That is done so parties don’t unknowingly change the agreement without intending to do that. It also makes sure that parties changing the agreement have the authority to make those changes.I've seen contracts where authority to make changes a specified individual or their successor. Amendments need to:A. Be numbered B. Contain an Effective Date for the AmendmentC. Reference the correct Agreement that is being amendedD. Be signed by authorized parties and datedE. If an amendment is multiple pages, the amendment number, the page number and the total number of pages should be listed Key Points:1) If the amendment applies to an existing section, it should reference the correct section number and show how the items originally read and what it has been changed to. 2) If it is adding or deleting a section, it should describe the change as an addition or deletion.3) If the amendment contains multiple pages, the applicable Agreement number and Amendment number should be on every page.4) At the end of the amendment it must have signature blocks for both parties and be signed by both parties for it to be effective. Signature blocks should include dates, and (particularly if the Effective Date in the amendment is established as the date when the last party signs the amendment,) The date blocks must be filled in.. In describing the actual changes to the Agreement here are some common examples:• If you simply want to change wording in a Section you would use: “Section5 which currently reads: __________________________________ is hereby modified to read: ________________________.”•“Section5, entitled “Payment” which currently reads “Payment will be made in thirty () days” is hereby modified to read: “Payment will be made in forty-five () days”If you want to add a new Section to the Agreement you would use:•“Section ___ which reads: ___________________________” is hereby added to the Agreement (and insert the entire text of the new section including the appropriate Section Number). When you add new sections or subsections, be sure to follow the existing numbering sequence and convention of the Agreement.If you want to delete a Section of the Agreement you would use”•“Section5 entitled __________ is hereby deleted in its entirety”.There are several things to manage when you manage amendmentsSince an amendment is a later writing in time between the parties it has the highest priority in terms of precedence. This means that you need to be very careful how you draft amendments. For example, if an amendment was needed for only one product, one statement of work etc., make it clear in that amendment exactly what that amendment applies to. If you don’t you will be amending all the other documents that have the same term. For example: “This amendment applies solely to Statement of Work # ______ and all other Statements of Work shall remain unchanged.” Another thing to be careful with in writing amendments is sometimes companies will have Agreements that consist of multiple documents such as a master agreement that applies to all purchases and scopes of work or statements of work that are unique to specific products or services. If you write an amendment and reference both documents, you can wind up amending something you don’t want to. For example you may write your master agreements for a long term or even make them evergreen. Your scope of work or statement of work may only have been written for a one or two year period. I’ve seen amendments then written that reference both contract numbers and extend the term for one year. The impact of that was the Statement of Work or Scope of Work was extended for the one additional year which is what the individual intended. However, since the master agreement was also referenced in the amendment, the individual unknowingly changed the master agreement from the longer or evergreen term to a fixed term agreement that would expire in a year. If the amendment had been written correctly, only the Statement of Work or Scope of Work number would be referenced in the amendment. Then the only that agreement would be amended and the Master Agreement’s term would have remained unchanged.For specific suggestions on writing see my KnowledgeToNegotiate blog post on Writing purchase specifications, statements of work, scope of work as the same suggestion on drafting and writing apply to amendments..In an agreement where both change orders and amendments are used, my own preference is to periodically incorporate any change orders issued in the interim into an amendment that is signed by both parties. It has no legally binding impact on the validity of the change order. What it does do is provide a single source that lists all the things that were changed in the agreement to allow you to determine both what the current terms are and what terms were in effect at a specific point in time. Including the date and the effective date of the change order or amendment is important from the perspective of managing claims and disputes. That is because you may need to identify exactly what terms were in effect on a specific date that gave rise to the dispute or claim. If you use a contracts system it should require the contract owner to provide key data about what is included in each amendment so you can quickly find information that you are looking for. I’ve wasted a huge number of hours trying to find things in major contracts that had many amendments where because the content of each amendment wasn’t clear. I had to go through every amendment to find what I was looking for.On major agreements with many changes I also prefer to do what is called an “amended and restatement of agreement as an amendment periodically. In doing that you are stating what the current agreement is so you don’t have to go back through every amendment to see what was added, deleted or changed. Contract managers should know what the current terms of their agreement are, and be also able to determine what they were at any specific time. It can take time to do an amended and restated agreement amendment, but it also reduces the amount to time you would need to spend to determine what the contract says at that point in time or what it was at a prior point in time. An alternative is to maintain a marked-up copy copy of the agreement and annotate the agreement by placing amendment numbers in the specific locations of the contract that were changed by each amendment. Over time and with many amendments it gets pretty confusing which is why I prefer amended and restated agreements.

Change the contract is a company or business firm are a item production producing or a asset selling and purchasing or a company missionaries