Variation of agreement: Overview, definition, and example
What is variation of agreement?
Variation of agreement refers to the process of making changes or amendments to the terms and conditions of an existing contract or agreement. This can involve altering specific clauses, deadlines, payment terms, or other essential details to reflect new circumstances or to accommodate the needs of the parties involved. Variations are typically agreed upon by all parties and should be documented in writing to ensure clarity and legal enforceability.
For example, if a company and a supplier originally agreed on a set delivery schedule but later decide to change the dates, this would require a formal variation of the agreement.
Why is variation of agreement important?
Variation of agreement is important because it allows flexibility in business relationships and ensures that contracts can evolve to meet changing circumstances, without the need to completely rewrite the original agreement. It provides a legal process for modifying a contract, ensuring that both parties are in agreement on the changes and protecting their interests. Variations help keep contracts relevant and functional over time, especially in long-term agreements or situations where external factors may cause the original terms to become impractical.
For businesses, having a clear process for varying agreements allows for adjustments to be made without disrupting operations. For individuals or organizations, it ensures that any amendments to the terms are properly documented and agreed upon to avoid disputes later on.
Understanding variation of agreement through an example
Let’s say a contractor is hired to complete a construction project, and the original agreement states that the project must be completed within six months. However, due to unforeseen delays (such as supply chain issues or bad weather), both the contractor and the client agree to extend the deadline by another two months. This change would require a variation of the agreement to amend the completion date.
In another example, a company and a client initially agree to a set fee for a service, but the scope of work changes significantly during the project. The parties may agree to vary the agreement by increasing the fee to reflect the expanded scope of work, and this variation should be documented to ensure clarity.
An example of a variation of agreement clause
Here’s how a clause like this might appear in a contract:
“The Parties agree that any variation to the terms of this Agreement shall be made in writing and signed by both Parties. Any such variation shall take effect only from the date it is executed and shall form an integral part of this Agreement.”
Conclusion
Variation of agreement is a crucial process for adapting contracts to changing circumstances, ensuring that the terms of an agreement remain relevant and fair to all parties involved. By formalizing changes through a variation clause, businesses and individuals can maintain clear communication, avoid misunderstandings, and ensure that all modifications are legally binding. This flexibility is essential for maintaining long-term and successful business relationships.
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.