Addendum, amendment, addendum, amendment. Seems like a tongue twister
right? Well the two terms mean entirely different things. It�s important
to know what an addendum is because if you use the wrong word, it could
change the course of your contract.
Let me first explain amendments. An amendment is an alteration of the
original agreement. This can be any thing from price to when the seller
vacates. For instance, an amendment can be used to during negotiations
to counter an offer already made. An example would be the buyer has
offered to pay X amount of money for the property with the following
conditions. Things like the kitchen appliances stay and so do the
laundry room ones. The seller can add an amendment which states the
washer is going but every thing else stays.
An addendum is part of the original contract. It is another section or
part which is very precise in what it says. For example if the buyer is
making an offer on a farm, he or she may want to clarify the terms in
more detail. Terms like what is to happen to the crops already planted,
or if any of the farm equipment stays can be clearly marked out in an
addendum.
The addendum becomes part of a legal and binding contract. The
amendments are parts of a contract still in negotiations. The addendum
will stand up in court. The amendments will just present what everyone
was thinking. If you ever did have to go to court over the contract, it
is a good idea to have both the final copy, with the addendum, and the
rough draft with the amendments. It can give the judge a better idea of
what was trying to be presented during the formulation of the contract.
A contract can have many addendums. Each one can be specific about
certain aspects of the sale. Consider them as if then clauses. For
instance, if the water supply in the well is not potable but safe for
other uses, the buyer can specify the seller must drill a new well. The
addendum can specify where the well is to go and who will drill it.
Amendments can be made to an addendum which states, in this case, the
well driller will decide where the well is to be placed.
Because an addendum is a legal and binding part of a contract, you must
pick your wording carefully when adding it to the original contract. The
addendum to a contract can include just about anything either party
wants to clarify. It is important to realize the original contract
should also incorporate wording such as �see attached addendum� or
�addendum attached� so that there is no dispute later on should a
question come up. There have been times the wording was not in the
original contract and the addendums not attached to the documentation
when a case was brought in court. This caused the courts some concern as
to what was valid and what was not allowed. In the end, the addendum did
help to win the case. However, if the single phrase �addendum attached�
had been in the original contract there would have been no questions.
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