An Addendum to the contract for construction is a legal document that is created when there is a need for addendum to an already existing contractor agreement. For example, if there already exists a contractor agreement on a real estate project, and the stakeholders decide that some form of changes need to be made, then the above-mentioned legal agreement is created so that the changes can be implemented on paper.
The most common use of such a contract can be found in real estate projects where there already exists a contractor agreement but some changes need to be made in order to abide to the new or revised government standards and norms. In this legal document an outline of all the changes that both the stakeholders decide are mentioned and this serves as a legal proof of a change in transaction terms and conditions taking place.
When Do You Need an Addendum to the Contract for Construction?
The most common use of an Addendum to the contract for construction is found in real estate projects where there already exists a contract between the realtor and the construction agent, but both the stakeholders decide that some changes need to be implemented either due to their personal motivation or most commonly to abide to new and revised government standards.
Among many other details, an Addendum to the contract for construction outlines the new rules and regulations along with the new set of terms and conditions that have been mutually agreed upon, along with the charges for the new plan to be implemented.
Inclusions in Addendum to the Contract for Construction
Parties Involved: When creating an Addendum to the contract for construction, all the original parties who were involved in the construction of the original construction are involved and all of them need to mutually agree and sign on the terms and conditions outlined in the new contract.
Effective Date: This contract contains details of the exact date from which the new rules, regulations along with terms and conditions will come into effect along with the date until which they are terminated.
Where does it Apply: This legal document is legally applicable within the boundaries of the state, city or county or the place where it was originally created.
How to Draft an Addendum to the Contract for Construction
Mentioned below are the steps for drafting an Addendum to the contract for construction:
- Organize a meeting between all the stakeholders and discuss the potential terms and conditions, their effect and how they will have an impact on the original plan.
- Once the terms and conditions have been discussed and mutually agreed, reach out to a legal team to draw up a draft Addendum to the contract for construction.
- Cross check and verify the details with all the stakeholders, after which you can get the signature from all the authorized signatories.
Benefits of Addendum to the Contract for Construction
The benefits of an Addendum to the contract for construction are far and wide. Mentioned below are the most significant ones.
Pros of having an Addendum to the contract for construction
- In the presence of this legal contract, all the stakeholders are well aware of the new terms and conditions along with the rules and regulations that have come into effect.
- This contract usually helps in abiding to government standards and thus protects all the stakeholders from government intervention.
- If the need be, this contract can be produced in a courthouse and served as a legal document.
Cons of not having an Addendum to the contract for construction
In the absence of this legal document, either of the stakeholders doesn’t have a legal proof of a transaction taking place and thus, everyone stands a chance for loss if the matter is brought to court.
Key Terms & Clauses in an Addendum to the Contract for Construction
- Disclaimers: When this legal document is created, all the involved parties need to be provided certain disclaimers, and the details of the same are shared in this section of the contract.
- Obligations: All the stakeholders have certain obligations to each other when this contract comes into effect and the details of these are mentioned here.
- Remedies: In the case of a default or lapse in terms and conditions, there are certain remedies that come into effect. This section mentions the details of the same.
- Notices: All the stakeholders need to be issued certain notices before, during and after the formation of this legal document, the details of which are shared in this section.
Sample Draft of Addendum to the Contract for Construction
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