Friday, December 16, 2016

How To Write An Amendment or Addendum.


An amendment is a document that changes what was agreed in the agreement or changes made by previous amendments. An addendum is simply a document that adds to or changes requirements that were stated pre-contract such as in a bid document or request for proposal. One of the key things to remember in drafting either of these is in interpreting a contract priority is given to the latest writing in time. This means that you always have to consider whether you want to addendum to apply to all prior documents or whether you want it to apply to a specific document. It also means you need to decide whether what you want that amendment to apply to the entire document or only for a specific requirement.

The general format for an amendment is fairly simple.

Amendment # ________to Contract # _________

1. This amendment (the "Amendment") is made by _________________ and _________________, parties to the agreement number _______dated ___________(the "Agreement").

2. The Agreement is amended as follows:
________________________________________________

3. Except as set forth in this Amendment, the Agreement is unaffected and shall continue in full force and effect in accordance with its terms. If there is conflict between this amendment and the Agreement or any earlier amendment, the terms of this amendment will prevail.

____________________________
By: __________________________
Printed Name: _________________
Title: ________________________
Dated: _________________

____________________________

By: __________________________
Printed Name: _________________
Title: ________________________
Dated: _________________

In drafting the actual amendment section there are three common methods used:

The first is by using redlines and strikethroughs. Under this method, additions and deletions to the contract are shown visually, with additions underlined and deleted text crossed out. The underline highlights the text added and the strikethrough shows the language that is being deleted. A second approach is the clause, section or document is replaced in its entirety. In this method, when amending a contract you simply state what is deleted and has been replaced. The third approach is to describe the amendment. Using this approach, the specific changes within a clause are described.

For example here is the original clause to be amended.

11. PURCHASE ORDERS
a) All Material purchased pursuant to this Agreement shall be done by Buyer's issuance of its Purchase Order, either in writing or by telephone or telegraph.

The goal of the amendment is to add both Electronic Data Interchange and Fax and to delete “telegraph” as it is no longer used.

Using the strike though and redline approach it would be:
a) All Material purchased pursuant to this Agreement shall be affected by Buyer's issuance of its Purchase Order, either in writing, by Electronic Data interchange, by Fax. or telephone. or telegraph

Using the delete and replace approach it would be:
1. Delete section 11 a) in its entirety and replace with:
“All Material purchased pursuant to this Agreement shall be affected by Buyer's issuance of its Purchase Order, either in writing, by Electronic Data interchange, by Fax or telephone.”

Using the describe the amendment approach it would be:
1. Modify Section 11 a) as follows: Delete the word “telegraph”. After “in writing add: “by Electronic Data Interchange, Fax”.

My personal preference is to not use the strikethough and redline approach. I prefer to use the other two approaches. When there will be a significant amount of changes in a section I prefer to use the delete and replace approach. When changes to a section are minimal, I like to describe the changes.

From a contract management perspective its best to maintain what I call a “record copy” of the contract that highlights what has been amended; by which amendment number; and when. That is because many times when disputes arise you may need to prove exactly what was in effect at a specific point in time or period. Here’s an example. We had manufacturing done by a contract manufacturer and there was a major defect with one of the supplier’s parts. The contract manufacturer argued that it was our problem as the supplier was our supplier. We did research on that supplier’s contract to identify if that was a part we had authorized for use and when did we authorize it. What we found was we had amended their contract to add the part for use, but that didn’t occur until well after the contract manufacturer started using it on their own. This discovery turned it from a problem we caused to a problem that the contract manufacturer caused by sourcing it on their own rather than our approved source that was different at the time.

For contracts that have many amendments over time, they can be difficult to work with and very cumbersome to understand what is required. An approach to eliminate this confusion is to do what is called “an amendment and restatement of agreement.” When you do an amendment and restatement of the agreement you create a new agreement as of that specific date where the original agreement and all amendments that are still in effect are merged together reflecting what is agreed by the parties as of that date.


Addendums:

In writing addendum to an RFP you would use:

Addendum # ________to RPP # _________

1. This addendum # ___________ dated___________ is added to RFP _______________

2. The RFP#______________ is changed as follows:

3. Except as set forth in this Addendum, the RFP is unaffected. If there is conflict between this Addendum and the RFP, the order of precedence shall be _____________________

By: __________________________
Printed Name: _________________
Title: ________________________
Dated: _________________

In an Addendum you would not use the Redlines and strikethroughs approach. Most addendums add new items that were left out of the RFP or would be deleting or changing requirements.

For adding or deleting documents you want to be clear so the document should have a title, a listing of the number of pages and the date of the document or revision number. For describing the changes to the RFP requirements you can use the same approaches as an amendment where you either have a Section or document is replaced in its entirety or you can describe the change.

For example:
If the goal is to delete a prior specification and replace it with a more current one you could say:
“Delete the document entitled Specification for Acme Rocket consisting of Ten (10) pages, dated June 3, 2014 and replace with the document entitled Specification for Acme Rocket consisting of Fifteen (15) pages, dated July 23, 2016.”

In doing either an amendment or addendum you always want to describe the specific document involved, so best practice is every document should have:
1. A title.
2. A list of the number of pages.
3. The date of the document or the revision number for the document.
That way it is clear exactly what document is being changed or added.

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