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Recently, I was presented with a contract amendment for one of the standard building contracts that was being disputed.  The portion of the contract that was modified did not address the main concern of the parties, or rather the original intention of the contractor.  Unfortunately, when it comes to amending a contract, humans can simply miss the mark.

 

The built environment tends to use standard contracts provided over the internet or in book format.  When these don’t suit the parties, they often look to amend the terms or attempt to specify bespoke terms in the Contract Data.  Often, no problems arise since these agreements cater for various changes.  However, when the standard contract format is not entirely clear in terms of a specific amendment, problems can arise.

 

So, here are the steps that I follow when making an amendment.

 

1. Understand the current set up of the contract and how the item in question unfolds.  A colleague once handed me an amendment to one of our standard contracts.  Upon discussing the matter with him and understanding what he wanted, I pointed out that the contract already addressed his issue in another clause, not the one at which he was looking.  Sometimes I find that the original contract and how it operates is not very well understood to begin with.  Consequently, any subsequent amendment may very likely miss the mark or worse simply confuse the parties.
2. Clarify the change you believe is needed.  Another way to put this is to ask what you are trying to achieve.  Sometimes it’s best to simply discuss it with someone to get your head around the issue and formulate what you want to achieve.  Alternatively, you could try simply writing in a non-formal manner to demonstrate your understanding of the issue at hand prior to drafting.
3. Identify the relevant clauses – note this can only happen after steps 1 and 2.  By walking through what you think the change ought to cover, you will then be in a position to follow the relevant clauses seeing which ones will be impacted and require consideration.  It’s important that you take the time to review your contract for these effects.  This is the most common mistake I come across.
4. Draft your amendment.  Now that you are fully aware of the current operation of the contract, the changes you wish to make, and the clauses that will be affected, you are ready to try your hand at drafting.  Taking a short cut by skipping one of these steps or not considering all relevant clauses will likely result in you ending up in a serious disagreement or perhaps arbitration.
5. Test your amendment.  Slot in the changes, as though they were in the original, and walk through the various scenarios or issues that may pop up.  Spend some time “thinking” and considering what may actually happen once the parties start executing their obligations.  Ask a colleague to read the amendments to see if they are clear.

 

Finally, the standard building contracts generally have an amendment clause which dictates that any change to the terms of the agreement must be done in writing and signed by the parties in order for the change to take effect.  Do not try to amend contracts verbally or hope that later down the line when the parties have deviated from the contract’s procedures that everyone will be on the same page should an issue arise.  This will simply lead to more costs on all sorts of levels in the end.

 

Paul Bellin is an advocate of the High Court of South Africa and an admitted attorney in the United States.  He frequently lectures on contract drafting and writing.