Changes: Overview, definition and example
What are changes?
Changes in the context of contracts refer to modifications or alterations to the terms or provisions of an agreement after it has been executed. These changes can involve adjusting deadlines, payment terms, scope of work, or any other aspect of the contract. Changes can be initiated by one or both parties and are typically documented formally through an amendment, addendum, or modification clause. In many cases, changes require the consent of all parties involved.
For example, a construction contract may include a clause that allows the project scope to change if unexpected conditions arise, such as the discovery of structural issues.
Why are changes important?
Changes are important because they allow contracts to remain flexible and adaptable to new circumstances, ensuring that the agreement continues to reflect the evolving needs and situations of the parties. Changes might be necessary due to unforeseen events, shifts in business conditions, or a mutual desire to modify the terms of the agreement. Without a clear process for making changes, a contract may become outdated or impractical, leading to confusion, disputes, or legal challenges.
Including a change clause in contracts ensures that any modifications are made in a structured and legally binding way, providing clarity on how changes will be handled and what procedures must be followed.
Understanding changes through an example
A company enters into a service agreement with a consultant. Initially, the agreement specifies that the consultant will provide market research for a particular product. However, midway through the contract, the company decides to expand the project to include additional products. A change clause in the agreement allows both parties to amend the contract to include the new scope of work and adjust the fees accordingly.
An example of a changes clause
Here’s how a changes clause might appear in a contract:
“Any changes to the scope of work or other terms of this Agreement must be made in writing and signed by both Parties. If any changes are required, the Parties will mutually agree on any adjustments to the fees, deadlines, or other provisions. No verbal modifications or informal agreements will be considered valid unless documented and signed by authorized representatives of both Parties.”
Conclusion
Changes are an essential part of contracts, enabling them to remain relevant and effective as circumstances evolve. A well-defined changes clause ensures that both parties understand the process for modifying the agreement, helping prevent misunderstandings and disputes. By clearly outlining how changes should be made and documented, contracts remain flexible, allowing for the smooth continuation of the business relationship.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.