Addendum vs. Appendix in Contracts: Definition & Difference

Instructor: Kenneth Poortvliet

Kenneth has a JD, practiced law for over 10 years, and has taught criminal justice courses as a full-time instructor.

When a contract is formed, the parties might want to make changes or additions. In this lesson, we will learn the difference between an addendum and an appendix to a contract.

What Did I Just Sign?

Jack and Jill enter into contract for Jack's distribution company to buy 10,000 buckets from Jill's manufacturing company each month for a period of five years. The agreement leaves out some of the details, like where delivery is to take place and how the buckets are to be packaged; those will be added to the contract as soon as they're worked out. After signing, Jill wants reassurances that if the delivery doesn't happen within 60 days from the agreed date, then Jack will start paying for the storage of the buckets.

So can they do that? Can they leave the small details unfinished and add to the contract later? Can the terms be changed or added to? The answer to all of these questions is yes, but this begs the next question: how?

Let's Agree

A contract is an oral or written agreement between two parties, each promising to get something and give something from the other party. The giving and getting is called consideration, and without it there is no binding contract. Each party to a contract must have promised to give something, and each party must receive something from the other party.

For example Suzy Snow promised to blow the snow off Mr. Jackson's driveway for $100. This is an enforceable contract. Why? Because they agreed to each give up something and get something. Suzy gave up her time, labor and supplies to blow the snow off Mr. Jackson's driveway in order to get $100, and Mr. Jackson promised to give $100 to get a clear driveway.

Terms of a Contract

If a contract exists, the court will enforce the terms of the contract. These are the provisions that give rise to an obligation in the contract, and the terms differ with the type of contract. Some of the usual ones are price, time, quantity and delivery; however, they can be anything the parties agree upon. If one party breaches the contract (i.e., fails to perform an obligation), then the court can enforce the contract, but only if the terms are clear. The enforcement can be a money award or even an order from the court demanding compliance with the contract. This is where the clarity of the terms come into play. If the terms aren't clear, then the court can't enforce them.

Let Me Be Clear

One way to make a term clear is to define the term in an appendix to the contract. This is added to the contract and usually referenced in the contract. An appendix might explain words, or even terms used in the contract. One would look at the appendix for additional information or clarification. It does not add any new obligations or terms to the contract.

From example, in Jack and Jill's contract, the term ''delivery'' might be used to explain and how the buckets would be ready for delivery. The contract might then say ''see appendix A for schedule and delivery procedures.'' Flipping to appendix A, the reader would see a schedule for delivery and a detail on how the buckets would be loaded or available for loading, how they might be packaged, or any variety of clarifying information.

Additional Agreements

Another addition to a contract is an addendum, which is used to add to, change or even cancel portions of a contract. This can be added at any time and can be enforced just like a contract. That's because it's really an additional contract. As such, it needs to have its own consideration.

For example, if Jill began to offer a smaller size bucket and Jack wanted to order some under the same terms, they could add an addendum to the contract that discussed the new size, price and packaging. If they liked the delivery in the original, they can reference in the addendum that the ''delivery'' was to be the same as in the first contract.

In Jack and Jill's case, it wouldn't make much of a difference to use an addendum or just enter into a whole new contract regarding the new buckets. But in many contracts, the terms are complex and the contract goes on for hundreds of pages. An addendum in those cases can be economical and efficient.

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