What is an Addendum?

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Definition:

An addendum is an addition to an existing written document, often a contract.

🤔 Understanding addendums

An addendum is a convenient way to add something to an existing document, such as a contract. It often includes information that wasn’t available when the original text was completed, provides clarification, or corrects an error or omission. An addendum can be minor, like updating a list of acceptable vendors. Or it can be substantial, such as defining payment terms or imposing new conditions. In contracts, addenda can add further terms without changing the original agreement. In contrast, an amendment alters the terms of a contract without renegotiating the whole deal.

Example

In August 2019, the Commonwealth of Virginia signed a contract with DroneUp, a company that provides drone data collection services to commercial and government clients. The agreement allowed the firm to provide services for wildlife management, law enforcement, disaster response, and more.

In February 2020, the State of Utah and DroneUp signed an addendum to that contract, which outlines the services to be used by Utah government agencies. The addendum added to the contract but did not alter the terms that DroneUp and Virginia had already agreed on.

Takeaway

An addendum is kind of like a meeting that won’t end...

You’ve probably sat in a meeting that finally seems to be wrapping up. The agenda items are checked off, and everyone feels good about where things are heading. Then you hear someone say the dreaded phrase: “Oh, one more thing...” Similarly, an addendum is tacked on to a document that everyone thought was finished.

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What is the purpose of an addendum?

An addendum is a convenient way to expand a document after it is finalized. Contracts, applications, books, research papers, and other texts often take a long time to complete. Instead of rewriting (and even re-signing) the whole thing, it can be easier to tack on an addendum at the end.

Addenda can add context or clarity to an issue that was ambiguous in the original document. For example, including a drawing or example can illustrate something in an agreement.

An author might include an addendum to a book in order to clarify a point that was left out or provide an update. A researcher might use an addendum to convey information that was not available when an article first appeared.

In all cases, the purpose of an addendum is to add to the record without changing it.

What is the difference between an addendum and an amendment?

An addendum adds to the language that was in the original document, while an amendment changes that language.

An addendum can clarify something in a contract, application, or other written document. It can offer additional information, like a map, schedule, or list of acceptable ways to meet contract conditions.

Sometimes addenda add further negotiated terms to a contract after it is signed. Other times they correct things that were misstated or left out. However, an addendum to a contract does not change the terms that all parties agreed to when they signed the agreement — It just adds to them. In some cases, someone other than the people who signed the original agreement can create an addendum.

An amendment, on the other hand, does change the terms of the original document. It may spell out the new terms in a separate document, which is attached to the contract. The modifications within the amendment replace the original language but leave all other terms in effect. Only the people who signed the original contract can approve an amendment.

In some cases, an amendment can be a direct edit to the contract. It may be as simple as crossing out one date and inserting another. However, all parties must indicate their approval of the change, usually by initialing next to the amended term, for it to be effective.

When do you write an addendum?

Addenda apply in many situations — from formal documents drafted by attorneys to personal correspondence.

Most people run into addenda in the context of real estate contracts. Typically, the buyer and seller use a standard earnest money agreement (a good faith commitment to purchase the property, along with a deposit) to lay out the boilerplate language of the deal.

The buyer’s real estate broker inserts the names of each party, the purchase price, and other required information, into the form. But the contract defines certain contingencies during the purchasing process. For example, it may give the buyer a chance to get the house inspected.

If the inspection report identifies problems, the buyer and seller may continue to negotiate. For instance, if the seller agrees to fix the leaking roof, that commitment can become part of the purchase agreement by way of an addendum. Addenda are also common in other contexts. Many applications and forms instruct people to add another page if they run out of space. That extra page might be considered an addendum.

For example, you might include an addendum to a college application to explain that your junior year grades were low because of an illness. Or perhaps you need an addendum for a job application because there isn’t enough room to list recent addresses.

If a company or government agency solicits bids for a project, a bidder might use an addendum to further explain the work they will do if awarded a contract. A landlord and tenant might use an addendum to add a roommate to a lease or clarify the types of pets allowed. A postscript (P.S.) at the end of a letter is also an addendum — You use it to include something you forgot instead of starting the whole thing over.

Basically, an addendum is anything that expands or further explains the contents of an original document.

How do you write an addendum?

Your real estate agent will write your addenda for you during a home purchase, and a lawyer will likely draft addenda to legal contracts. But you can write an addendum to a contract yourself. You may want to follow a few guidelines:

  1. Use the same font, format, margins, and style as the original document. Making it look the same will help people understand it is part of the same document.
  2. Title the addendum with a reference to the original document. For example, you might title it: “Addendum A to the contract dated March 31, 2020 between XYZ Company and QRS Company.”
  3. Include an effective date. For instance, “This addendum is in effect as of April 15, 2020.”
  4. Be specific about what you are correcting or what terms you are appending to the original contract. For example, you might say, “Acceptable vendors to carry out the conditions of Item C on Page 3 of the contract are limited to those listed below.”
  5. If the addendum is purely informational, it can be attached by anyone. But if the addendum creates additional obligations that are important to the terms in the contract, you need to include the signatures of all parties to the original agreement. That is the only way to demonstrate that all parties agreed to the contents of the addendum and make it enforceable. It might even be a good idea to notarize the document.

An addendum does not have to be very long. It can be one sentence that adds something that was left out of the original contract, application, or other document.

For example, after you submit a life insurance application, you may recall that you went to the doctor five years ago. When that information comes to light, the insurance company may ask you to attach a one-sentence addendum to the application that discloses that fact.

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