Creating Effective Contract Amendments: How to Utilize Word Templates

Contract Amendments Explained

Amendments are changes to the original agreement and allow parties to modify the terms of the contract as necessary without invalidating the entire agreement. They can be used in many circumstances and can cover anything from changes in compensation, term length, or even the scope of work to be performed. Amendments can even be used to restate an entire contract with updated language or changes in the executing parties.
Contract amendments are a critical aspect of almost any legal contract. An ever-evolving business world paired with the probability of unforeseen circumstances means that there are few contracts that can stand the test of time. Contract amendments are often used to address changes in law , changes in business, changes in terms, changes in parties, or changes in the services or goods to be provided. These changes and more have given rise to the pragmatic use of amendments as a frequent way of updating an existing agreement. Amendments are ubiquitous in drafting and reviewing contracts because they facilitate the need for changes without creating the need to draft new contracts for any changes that arise following execution.

Advantages of a Contract Amendment Template

The concept of efficiency is central to the drafting of contracts as well as in-house legal strategies. One important way this is accomplished is by using standard form agreements and drafting templates. When it comes to contract amendments, there is a particularly useful form amendment available for ongoing and long-term contracts. This section will examine the advantages of using a pre-completed template as opposed to drafting a new amendment each time an existing contract is required to be modified. Properly written, a contractual amendment will not only incorporate changes to the original agreement but can also clarify the parties’ intent to avoid future disputes.
Efficiency – In terms of process, creating a template contract amendment saves significant time as opposed to starting from scratch on each occasion one is needed. If contract amendments are recurring on a regular basis, simply inserting the proper reference to the original agreement allows the drafters to completely revise all of its substantive provisions. When using the insertion function in Word, template amendments make it a streamlined process to replace prior dates, text and other relevant items from an earlier draft with updated information. For contracts that are expected to amend the underlying agreement on a regular basis, drafting an amendment template can eventually result in a fairly quick drafting process.
Consistency – There is a great deal to be said for producing consistent, uniform contract drafting when it comes to amending business agreements. Consistency not only applies to the manner in which a standard template is "filled-in" when amending a particular contract but also to the types of references made to the original agreement and prior amendments that are used. Regularly using a standard amendment means that there will not be any arbitrary choices made in the drafting process that deviate from the manner in which references have been made to prior agreements on similar amendments.
Legal Compliance – Potentially the most important advantage of contract amendment templates is to ensure that each modification to an agreement provides protection to the parties by ensuring the legality of each and every revised provision. This is particularly so if the agreement concerns complex commercial or corporate laws that may require special provisions that are not common to most agreements. A template amendment reduces the risk that any alterations to an agreement in a commercial context would inadvertently result in a violation of law or regulation. The revision of the entire amendment based on an original standard draft also ensures that nothing would be changed by oversight in a way that might inadvertently alter the agreement.

Key Features of an Effective Contract Amendment Template

A contract amendment template should contain the following:
Parties: the correct parties to the underlying contract and the effective date of the amendment. The effective date of an amendment is often "effective immediately" upon the signature of the last party, or on the effective date of the original contract.
Amendment: the entire section of the original contract being amended. A paragraph at the end stating that all the other sections of the contract are unchanged and are in effect.
Signatures: usually the signature block includes a spot where the parties will write their name, and then another line saying "its…" for example: "Comcast Cable Communications, L.L.C., a Delaware limited liability company By: John Smith Its Vice President". From there, you can use the standard signature blocks already in Word.

How to Personalize a Contract Amendment Template in Word

Existing templates, including those supplied by your attorney, are usually an excellent starting point. They already contain necessary language that can be used as a basis. In the case of some contract or agreement amendments, it may be that the amendment motion inheres in the original contract, so no form contract amendment is needed. But many are less clear, and a contract amendment template can often help.
There are many available, whether for customer contracts or otherwise, and if you’re just doing one or two amendments, purchasing one may not make financial sense. Plenty exist for free, and they can be readily customized for an amendment for a specific contract. If, however, you find yourself doing amendments on a regular basis, it may well be worth it to have them done by a legal professional, especially one with experience crafting custom contract amendment templates.
If you’re making an amendment template, you will need to be familiar with some basic Microsoft Word techniques to modify the template once you have it open. There are two primary options at this stage. First, you can click and type. Depending on the complexity of the project, this might be simplest solution. You can also use the "find" option in Word to locate particular phrases from the prior contract and copy and paste them as you go. Alternatively, you can simply type. Make sure you use proper spacing, indentations and other similar forms of formatting. If you insert any "fields," such as date fields or signature or other form fields, then you can easily edit these as you go.
The second option is to edit using fields and placeholders. List all the required fields first and then add a "merge." This will list the specific fields and provide you a menu with which to select and deselect individual fields.

Common Pitfalls in a Contract Amendment

Creating a mutual amendment is not as simple as just adding new contract terms. There are some common mistakes that are made when using a document template or drafting one yourself that can lead the amendment to be legally ineffective.
One of the most common issues with contract amendments arises from improper incorporation into the parent agreement. If the amendment incorporates the original contract as an attachment, it is important to make sure that the attachment is properly attached. If the template calls for the attachment to be an exhibit, and it gets referred to as an appendix rather than by exhibit number, then a court may rule that the modification is ambiguous. Another problem is if the original contract does not provide that it may be amended . If the amendments directly contradict the contract, the amendments must be clear that they are controlling over the parent agreement. There are also issues when the amendment is not clear on its face if it is truly a mutual amendment and what the intent was of the parties. If there are multiple parties to the contract, issues can arise without a clear indication of whether the amendment is trying to cancel or novate the contract. Then, additional issues arise when you have a terminated agreement that is being replaced with more than one contract, but the parties did not intend that the first contract be terminated. If the parties do not permissibly cancel the original agreement or if one of the contracts is deemed to not have been an effective mutual amendment, the practical effect is that the transactions involving the subject matter of the amendments are not effective.

Best Practices for Reviewing and Finalizing Amendments

Once the amendment is prepared, there is almost always an iterative process where the parties seek to negotiate points that are in dispute. How the parties handle those disputes, it sometimes seems, turns out to be the deciding factor on whether the initial spirit of cooperation needs to be set aside in order to prepare a new template for next time.
A best practice for contract amendments – and individual contracts, for that matter – is for the parties to insist that legal counsel review all amendments before they are signed. There is a tendency in many organizations to leave this to the end, but the potential cost of having an attorney make changes after signature has been shown to be dramatically greater than the cost of a legal review at the front end. Lawyers have extensive experience in matters such as what happens when the wrong version of a document in inadvertently executed (in the unforgettable case of a substantial contract between Microsoft and Reuters, the parties executed eight different versions of a single document, each version incorporating changes made to a prior version and each referring back to a prior version as having been executed. The problem was compounded by each version appearing to have been executed by being stamped "EXECUTED "rather than by signature) and how to avoid inadvertent termination or cancellation of allegedly continuing obligations. To be sure, all lawyers have their own particular specialties, some much broader than others. But the right review at the right time can save money, and aggravation, by avoiding disputes down the road. We don’t claim to be among those lawyers with the broadest specialties, but we do have frequent opportunity to review drawn agreements and have learned from those experiences. Those lessons are readily adaptable to other situations, so that those who regularly draft contracts find that they too routinely incorporate language advising the parties how to avoid most common problems in drafting and amending agreements.
Amendments, like a lot of similarly short documents that are attached to longer ones, may be treated as separate documents. In other words, the amendment may not be signed on the same date or even the same year as the document to which it purports to be attached. That means that signatures already obtained can be lost if the amendment becomes separated from the underlying agreement. For that reason, we prefer to use a single document, with all amendments appearing on the same sheet or sheets of paper with all of the original contract terms.
Finally, a best practice for reviewing amendments is proofreading. It is far easier to proofread legible text than to revise documents. We always review an amendment twice through, once to examine the content, and once to listen to the auditory proof. For the auditory proof, I read the short document out loud and compare it with the printed copy. This works well because in hearing the text I will sometimes hear things I do not intend and realize I need to make a change. Sometimes, for example, I mean to call for $100,000 of liquidated damages, but when I read the written document out loud I hear $10,000. Often changing a letter changes what I hear. Another example, in hearing an ungrammatical phrase (like this one) one may realize that a change is needed.

Where to Obtain Contract Amendment Templates

Templates for your contract amendments are easy to find online, but the challenge is sifting through Google and finding one that you can consider trustworthy. I’ve found that it is usually worth the hassle, as your drafters will rely on these templates much like they rely on their drafting software. In other words, if the template has a bad clause, your drafters may blame the template rather than trying to understand what the bad clause is and whether they should negotiate it out.
Sites with free contract amendment templates typically fall into one of three categories. First, there are never before seen templates of questionable reliability. Second, there are templates posted on the web that are attempts to drive traffic to a site to try to get you to buy something or to click through to view some ads. Finally, most law firms have forms of amendment agreements they post for free. If you click on those links in your search for a free template, you will likely hit about half and half – true law firm templates and "fake" law firm templates. The trick is to pick out the true ones. The easiest way to do this is to find a law firm template . That template should clearly state that it is a revision from another firm, and the prior firm should be well known. If it does not state that, you should take a look at the firm’s name and consider looking elsewhere. The same goes for AmLaw 200 firms – if the name does not closely match up, look elsewhere.
Many county bar associations and local licensing organizations have legal forms they’ve vetted by committee. These organizations are a bit more difficult to verify, but they usually stipulate whether you are allowed to change their templates. If you see many editorial comments, move on.
Finally, here is a link to one of our own templates. We have a variety of contract amendment templates, but we’ve pulled together a 50 State Survey of assignment and change of control clauses into this document. It should be considered a starting point, but it is based on legislative histories and can be easily word searched to find the right assignment or change of control clause for you. It also includes links to some of our other posts in this space, so it may be a good place to start in assessing your strategy for an amendment.