An addendum is an extra piece of information added to an existing document such as a contract or an agreement. The main purpose of an addendum is to clarify, modify, or nullify a portion of the original document. It can be as simple as updating a list or as substantial as imposing new conditions.

An addendum report can reduce costs by two-thirds for companies that should maintain compliance. For instance, if a certified product needs to be modified, the company can use an addendum report to avoid incurring the expense of a full report.

Read on to learn more about an addendum.

How Does an Addendum Work?

Addendums are mostly used to add information that changes the initial agreement of the original contract. You can also use addendums for informational purposes. In this case, it may contain diagrams or drawings that clarify the details of the agreement.

All parties involved should sign addendums for it to become a part of the contract. The signatures prove that all the parties have reviewed and accepted the terms of the additional information.

Addendums Vs. Amendments

Many people tend to confuse an addendum with an amendment. The two are almost the same, but they’re different in the way they interact with the original document:

• An addendum is a separate attachment that modifies or clarifies the terms and conditions of an existing document but does not change the existing text.
• An amendment changes sections or clauses of an existing document or contract. An example is when a construction company signs a contract to construct a new building. But when they begin to dig the foundation, they realize that the underlying soil is substandard and should be reinforced. In this case, they will make an amendment to the contract which includes the requirement to reinforce the soil.

Examples of Addendums

Here are some of the most common instances where an addendum is appropriate:

• Real estate sales contracts: Sometimes, a buyer or seller may need to add some information to a sales contract. For instance, when a seller decides to include pieces of furniture to increase the value of their house, they can use an addendum instead of writing a new contract.
• Mortgage terms: An addendum can be used to amend sections of a mortgage contract, such as the closing date for the sale.
• Will: If you decide to make changes to your will, you can attach additional information instead of writing it again from scratch.
• Sales contracts: You can use an addendum to change the terms of a sales contract, such as the location for delivery of goods or the terms of payment.

An Addendum Enables You to Change Your Mind

An addendum is a convenient way of adding new information to an existing document or contract. It can be used to clarify, correct, or add information not included in the original draft. For an addendum to be valid, all parties involved must agree to and sign it in the presence of a witness. Once it’s signed and certified, it becomes part of the original terms and conditions.

John Mali Director of Media Relations

Director of Media Relations at AboutBoulder.com

john@aboutboulder.com