San Diego Business Contracts: The Amendment-Addendum Difference
Business contracts can be confusing at times. That is one reason that is important to consult an experienced San Diego corporate attorney to review contracts that you are being asked to sign, and/or to draft contracts that you want to present for signature. One confusing aspect of business contracts is the difference between an “amendment” and an “addendum” to a contract. Both “amendments” and “addendums” relate to and follow after a written contract that the parties have already signed. In general, an amendment changes the already-signed contract in some meaningful way while an addendum supplements, adds, or completes an already-signed contract.
For example, an amendment might be used to change the pricing structure with respect to the goods and/or services being provided or to change the obligations of the parties. By contrast, an addendum might be used to include related products within the pricing structure — say, adding “pears” to the existing pricing structure for apples and related fruit. Addendums are also used to add identifying information such as serial numbers or street addresses were such were missing in the original contract. Addendums are often used to add items to exhibits in a sales contract. For example, if certain furniture is sold as part of an asset sale, an addendum might be used to complete the list of furniture or add inadvertently omitted furniture. The key to an addendum is that no new legal obligations are imposed.
It should be noted, however, that the name given to a document — amendment or addendum — will not be controlling for a California court. If presented to a court as part of a legal dispute, the court will look past the name and look to the substance of the document. Legally speaking, often the key issue with respect to an amendment or an addendum is whether it is enforceable. Often the question is whether it was signed by the relevant parties. In general, the best practice is to have the amendment and/or addendum signed. Once a signature is obtained, that generally removed any argument about enforceability.
In the absence of a signature, California courts will consider several factors when determining enforceability including:
- Whether an addendum or amendment was contemplated when the original contract was signed — sometimes parties sign a contract knowing that “Exhibit A” or some other part of the contract still needs to be finished
- The length of time between the signing of the original contract and the completion of the addendum or amendment
- Whether the terms of the addendum/amendment are similar to the terms of the original contract
- Notice, review, and back-and-forth negotiations with respect to the addendum or amendment
- Past performance and/or course of dealings
- Other evidence that the parties agreed to the addendum or amendment — the “intent to be bound” requirement
As a general rule, courts will enforce addendums more easily than amendments since addendums do not impose any additional legal obligations.
Contact San Diego Corporate Law
For more information, contact attorney Michael Leonard of San Diego Corporate Law. To schedule a consultation, contact Mr. Leonard via email or by calling (858) 483-9200. Mr. Leonard has been named a “Rising Star” four years running by SuperLawyers.com and “Best of the Bar” by the San Diego Business Journal. Like us on Facebook.