Pitfalls When Drafting Amendments to Contracts

When you draft contracts, you draft them, hopefully, with future contingencies in mind. You’re accounting for things that can go right and wrong, and even for unforeseen or unlikely scenarios, that could affect both parties’ ability to carry out the contract.

But life doesn’t always work that way, and sometimes a contract needs to be modified or amended.

And that can be a good thing–amendments generally mean both parties are amenable to working things out, being flexible, and trying to move forward with their plans, instead of just running to the courthouse steps to sue.

But amendments to contracts are often done the wrong way–people will often just verbally amend contracts, or hurriedly write down an alteration to a contract. People will have an attorney carefully draft up an original contract, but then they will just write down an amendment to that contract on their own–and that can cause legal problems.

Oral Modifications

Oral agreements can legally modify pre-existing written agreements. Of course, there is always proof, “he said/she said” problems, but express agreements to alter or change a contract are binding–so it is best to either avoid oral modifications, or at least, make sure to boil those agreements down to a written amendment.

Some contracts do, however, have an express provision saying oral modifications are not binding. In that case, you’ll need a written modification.

Contradicting the Prior Agreement

One thing to look out for when drafting amendments or changes to contracts are contradictions.

Your amendment might contradict previous terms in your original agreements. When they do, by law, the amendment will usually take precedence over anything which is contradictory in your prior contract.

That may be exactly what you want. But when amendments get too broad, or are written the wrong way, they can have the unexpected effect of “overwriting” terms of the original agreement that you wanted to remain in effect.

Watch for Waivers

You also want to make sure that you aren’t waiving any express rights you may have had, and might need to use, in the original contract. For example, if your original contract allows you to seek an injunction on breach, and you execute a modification without that language–you may be waiving your right to seek injunctive relief that was allowable in the original agreement.

Amendments Out of Scope

Your modification is just that; an amendment or change. It should not be an entirely new contract that exceeds the scope or topic of your original agreement.

For example, if you have a construction contract, and later you want to add that you will be employing the general contractor for another job later on, that latter contract should be an entirely separate agreement; it deals with a brand new topic, unrelated to the prior agreement.

Your contracts are important. Get them correct the first time by getting good legal help. Call our West Palm Beach commercial litigation attorneys at Pike & Lustig for help with your business agreements.

Source:

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