Addendum: Definition, Functions, and Types

For those of you who are transacting in the property world, you must be familiar with the term addendum. Because this document is generally used in transactions real estate market.

An addendum is a legally binding document and must be signed by all parties involved.

This document can usually be found with the original agreement or contract they modified. In some cases, they may be included at the end of the original agreement or contract, while in other cases they may be attached as a separate document.

The following is a more complete explanation regarding the addendum.

Meaning of Addendum

An addendum is an additional document or information that is added to an existing agreement or contract. This document can be used to clarify or change the terms of the original agreement and to add new terms or conditions.

This document is typically used when both parties agree to a change to the original agreement, but don't want to create a new contract from scratch.

However, this addendum must not contradict or overrule the terms of the original agreement. Instead, this document should be used to supplement or amend the original terms in a way mutually agreed to by both parties.

An example is when a landlord and tenant agree on a lease, but then decide to add a new rule or condition, such as a no-pet policy, they will use this addendum to add a new rule.

Addendum Function

The function of the addendum is to modify or add to an existing agreement or contract.

This is necessary if the parties involved in the agreement need to add new terms or conditions, clarify certain parts of the agreement, or make changes to the original agreement.

Addendums can also be used to address issues not previously covered in the original agreement.

And because of the addendum, the parties can make changes or additions to existing agreements directly and efficiently.

Addendum Type

Addendum has several types that you need to know, the following are the types:

Contract Addendum (Add Less)

This type of addendum is used to delete or reduce part of an existing agreement or contract.

For example, if one party wants to withdraw from the contract, a contract addendum can be used to modify the agreement and cancel the contract.

Price Addendum

This type of addendum is used to change the pricing terms of an existing agreement or contract.

For example, if a vendor needs to increase the price of a product or service, the additional price can be used to modify the original agreement to reflect the new pricing terms.

Time Addendum

This type of addendum is used to change the timeline or duration of an existing agreement or contract.

For example, if a project is taking longer than expected, a time addendum can be used to extend the time to completion.

Or if the lease agreement expires and both parties wish to extend the lease term, a time addendum can be used to amend the original agreement.

This is an explanation of the addendum, I hope this is useful.