Terms Limiting the Amendment of a Contract

One fundamental way to limit “inadvertent” amendment of a contract is to specify in the contract how an amendment can take place. The most common term will specify that there can be no amendment to the agreement unless it is in writing and signed by the parties.

This sort of term does two things: First, such a term forces the parties to make sure that the original agreement is something they can live with if they are unable to amend the contract later because of a disagreement. Second, the term makes sure that both parties engage in the appropriate process internally to review and agree to any amendment that is proposed.

It is important to remember that the businesses entering a contract are separate and distinct from the people who own and run them. Putting a limitation on amendment helps to encourage businesses to operate distinctly and take formal action. This increases communication and discussion on the important issues which govern how the business operates.

In addition, contracts are entered as a way to make business interactions clear and reliable. The inclusion of a limitation on amendment helps the parties who enter a contract take the contract seriously. It also works to make sure the bargain put in place is stable, predictable, and only changed when it makes strategic sense.

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