#contractingprocesses

[contraxaware]

How to Handle Contract Amendments

Contracts are like photographs that capture the details of an agreement at a specific point in time. However, circumstances change, and even a contract written with an eye to the future may need to be changed. Amending a contact must be done carefully. You want to change the parts of the deal that are no longer working while preserving the parts of the deal that do work.

When You Need a Contract Amendment

Legally, an amendment is a change to a contract after it has already been signed. Any changes to a document before it has been signed are known as modifications. You may need a contract amendment when a handful of sections or clauses need to be changed. For an amendment to be enforceable, both sides have to agree to the changes. If the entire agreement needs to be altered, you are better off formally terminating the contract and executing a new deal. Every time you amend a contract, you increase the chances of accidentally altering the agreement in unintended ways. Common reasons parties amend contracts include changing market conditions, unexpected complications, or an evolution in the business relationship between the two sides.

Difference Between Amendments, Supplemental Agreement and Restated Agreements

There are many different legal terms that are related to amendments but are separate legal concepts that are often confused with amendments. An amendment to a contact means the original contract language is changed in some way. A supplement is an additional document to the contract that does not change the original terms but does add new terms. A supplemental agreement is a legal document that memorializes the settling of a dispute as to the original terms of the contract. A supplemental agreement will describe the dispute and the settlement in an objective fashion. Restated agreements are the replacement of an entire contract with an amendment. In most cases, restated agreements should be avoided in favor of termination and execution of a new agreement.

Don’t Use the Quick and Dirty Method

The law gives the parties to a contract a lot of freedom to amend the contract. This includes the quick and dirty method of crossing out terms and handwriting new terms on the face of the signed agreement. If both sides initial and date these markings, they are valid amendments. However, you should not use this quick and dirty method because it makes the contract harder to understand, and it can lead to misunderstandings, disputes, and accusations of fraud. A better practice for contract amendments is to write out the changes and make reference to the specific provisions that are changed by the amendment. This is cleaner and leaves a paper trail should litigation be needed in the future.

Clearly State Reason for Amendment

You need to clearly state the reason for the amendment. In the heat of the moment, it may be obvious why certain changes are being made. But, in the future, the reasons may be forgotten. Stating the reasons for any changes will help keep both parties on the same page. It can also help settle future disputes. Every contract and amendment should be written with the idea that some stranger may need to read and understand the terms of the agreement.

Use Detailed References

When writing a contract amendment, you need to be detailed. You should state that clauses are being changed, where those clauses are located in the contract, and what changes are being made. It is better to lean on the side of providing too much detail than not enough.

Execute the Amendment

For an amendment to be enforceable, it must be executed. Authorized representatives, preferably the same ones who signed the original contract, need to sign and date the amendment. If the amendment is not signed by both sides, it isn’t legally valid. Depending on the contract and the circumstances, it may be technically possible to orally amend a contract. But, this almost always leads to disputes and litigation. Take the time to execute a written amendment to the contract.

Store Amendment with Original Contract

Once the amendment has been executed, it is not a separate legal document. It is part of the contract. You need to store the amendment with the original contract in your contract management system. Most contract management software makes this process easy. Read the full article

[contraxaware]

How to Handle Contract Amendments

Contracts are like photographs that capture the details of an agreement at a specific point in time. However, circumstances change, and even a contract written with an eye to the future may need to be changed. Amending a contact must be done carefully. You want to change the parts of the deal that are no longer working while preserving the parts of the deal that do work.

When You Need a Contract Amendment

Legally, an amendment is a change to a contract after it has already been signed. Any changes to a document before it has been signed are known as modifications. You may need a contract amendment when a handful of sections or clauses need to be changed. For an amendment to be enforceable, both sides have to agree to the changes. If the entire agreement needs to be altered, you are better off formally terminating the contract and executing a new deal. Every time you amend a contract, you increase the chances of accidentally altering the agreement in unintended ways. Common reasons parties amend contracts include changing market conditions, unexpected complications, or an evolution in the business relationship between the two sides.

Difference Between Amendments, Supplemental Agreement and Restated Agreements

There are many different legal terms that are related to amendments but are separate legal concepts that are often confused with amendments. An amendment to a contact means the original contract language is changed in some way. A supplement is an additional document to the contract that does not change the original terms but does add new terms. A supplemental agreement is a legal document that memorializes the settling of a dispute as to the original terms of the contract. A supplemental agreement will describe the dispute and the settlement in an objective fashion. Restated agreements are the replacement of an entire contract with an amendment. In most cases, restated agreements should be avoided in favor of termination and execution of a new agreement.

Don’t Use the Quick and Dirty Method

The law gives the parties to a contract a lot of freedom to amend the contract. This includes the quick and dirty method of crossing out terms and handwriting new terms on the face of the signed agreement. If both sides initial and date these markings, they are valid amendments. However, you should not use this quick and dirty method because it makes the contract harder to understand, and it can lead to misunderstandings, disputes, and accusations of fraud. A better practice for contract amendments is to write out the changes and make reference to the specific provisions that are changed by the amendment. This is cleaner and leaves a paper trail should litigation be needed in the future.

Clearly State Reason for Amendment

You need to clearly state the reason for the amendment. In the heat of the moment, it may be obvious why certain changes are being made. But, in the future, the reasons may be forgotten. Stating the reasons for any changes will help keep both parties on the same page. It can also help settle future disputes. Every contract and amendment should be written with the idea that some stranger may need to read and understand the terms of the agreement.

Use Detailed References

When writing a contract amendment, you need to be detailed. You should state that clauses are being changed, where those clauses are located in the contract, and what changes are being made. It is better to lean on the side of providing too much detail than not enough.

Execute the Amendment

For an amendment to be enforceable, it must be executed. Authorized representatives, preferably the same ones who signed the original contract, need to sign and date the amendment. If the amendment is not signed by both sides, it isn’t legally valid. Depending on the contract and the circumstances, it may be technically possible to orally amend a contract. But, this almost always leads to disputes and litigation. Take the time to execute a written amendment to the contract.

Store Amendment with Original Contract

Once the amendment has been executed, it is not a separate legal document. It is part of the contract. You need to store the amendment with the original contract in your contract management system. Most contract management software makes this process easy. Read the full article

[contraxaware]

3 Advantages of Contract Management Software in Boosting Business Operations

Contracts are there to govern the daily operations of your business. Therefore you must understand the importance of contracts. Besides that, you must know why it’s a priority to invest in contract management software. However, there are a few companies that rely on other management systems yielding only a few pieces of crucial information. The Contract management software offers a plethora of benefits from the initial phases of drafting. Most importantly, it contributes to managing renewals and resolving risks. Besides that, it enhances productivity within a dynamic and competitive market. Let’s discuss some of the key advantages of contract management. Improving Contract Management, Creating Drafts and Monitoring Workflows Drafting and approving a contract often gets delayed. This is because the legal department needs time. Most importantly, it affects productivity and jeopardizes a deal. The unrestricted contract versions generate more risks alongside committing errors while cutting and copying. The contract management software resolves these issues. It ensures an accurate arrangement and storage of contracts. Besides that, it enhances productivity by utilizing a drafting process based on templates. It speeds up the entire contracting process. This happens because legal experts can easily access all tools and contracts. Templates mostly drive an interview process to extend self-help contracting opportunities in a risk-free manner. The CMS identifies issues concerning the addition of terms attempted by the other parties. Apart from that, a revision often helps to flag these issues. It helps inform all parties of such changes. Most importantly, it restricts the time of approval and ensures a smooth process. Besides that, it maintains uniformity across various terms and clauses. Abiding By Contract Compliance A contract comes attached with a few obligations. After signing it, the parties to the contract fulfill these obligations due to their legal bindings. Most importantly, you only review the contracts when it’s the time to renegotiate the terms. Therefore, you check the actual clauses only when a noncompliance issue arises. This is because one of the parties to the contract suffers losses due to these issues. The management software provides more insight into the clauses for contract owners. This is because it helps them understand the contract terms. Most importantly, a contract owner understands all obligations while going through it. It helps in meeting deadlines. Besides this, it also helps extract pricing and other key information pertaining to project management. In addition, it helps in streamlining productivity and lowering risks. Gaining True Insights Contracts often lead to a few complex issues as mentioned. With an increase in the number of contracts, you’ll find it tough to manage your portfolio. This is because it often becomes tough to analyze and identify the contents. Besides this, it’s tough to judge the elements of risk in multiple contracts as compared to a single contract. The contract management software system utilizes artificial intelligence. Besides that, it helps extract and analyze contract data through machine learning. Apart from basic terms, it helps assess crucial risks, clauses, and terms mentioned in the contract. For instance, an artificial intelligence engine is used for identifying all key changes that affect a contract. It happens because the key regulation changes can have far-reaching effects. Most importantly, you’ll stay compliant for identifying and resolving issues pertaining to conditional changes. Therefore, it becomes easier to draw reports on the whole contract portfolio. A business can certainly explore the advantages of contract management. Most importantly, it really pays you for investing in an advanced system. This is because it increases efficiency and lessens risks. Read the full article