Addendum

What is an addendum?

An addendum is a change to an existing contract. After signing a valid legal contract, parties use addenda to alter the terms of the contract or to clarify a portion of the original document. An addendum may also permit activities that the original contract forbade.

Deeper definition

To minimize confusion, an addendum is attached to the original contract. A number of different types of contracts utilize addenda, including:

All parties to the original contract or their agents must agree to a new addendum. If you need to drastically alter the content of a contract, it is usually advisable to create an entirely new contract.

Technically, you can add an addendum to a contract via an oral agreement. However, parties should put any alterations to the contract in writing, making it easier to enforce violations of the addendum.

Addenda are different from other appendices separated out from the main body of the contract. These include annexes, which are stand-alone texts or tables included in the contract, or exhibits, which are used in court cases.

Addendum example

If you sign a legal contract, it’s possible that you’ll have to agree to or consider an addendum. For example, assume that you’re selling your home and purchasing a new home at the same time. A prospective buyer makes an offer on your original home; you accept the terms of the offer and sign the contract. However, your lender delays the closing date for your new home due to verification problems with your financial information. You propose an addendum to the original contract that changes the date that you’ll close on the sale of your old home. Your buyer agrees to the new closing date, and the addendum becomes a valid part of the purchase contract.

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