All companies rely on legally binding, explicit contracts that denote responsibilities, obligations, payment schedules and amounts, and a variety of other important things. Odds are your company has several important contracts it relies on each and every day!
But what if you need to update one of your company’s existing contracts? In that case, you’ll need to know how to update a company contract’s language legally and smartly. This guide will break down how you can do just that.
When is a Modified Contract Legally Binding?
Modified contracts can become legally binding, but they don’t start off that way. Until a contract is signed by all the involved parties, it cannot be held as legally binding in a court of law or for any other lawful processes, including those involving law enforcement or attorneys.
For example, if your company uses an employment contract to break down the responsibilities and limitations of an employee, that contract is legally binding, provided you and the employee in question both sign it.
“If you want to modify the contract to change the employee’s responsibilities, a new version of the same contract isn’t legally binding until you both sign it,” says Lina Miranda, VP Marketing at AdQuick. Therefore, to update your company’s contract language, you must:
• Update the contract by changing, adding to, or removing some of its writing/language
• Sign the updated contract
• Have anyone else the contract concerns sign it as well
Modifications Before Contract Signing
Any modifications made to a contract before it is signed are not legally binding. Say that you take the above-mentioned employee contract and cross out a few lines. Even though those crossed-out lines might reflect what you want from the contract language, you cannot force your employee to abide by that language until a new document is signed by both you and the employee.
Updating Contract Language for Your Company
There are three major ways in which you can update contract language for your company documents, agreements, and other important paperwork.
Visually Change the Contract’s Terms
This is the first and most common way to update contract language for a company. You can visually change the contract’s terms by taking a red pen and crossing out inaccurate text. This shows that you want to remove certain lines or clauses.
“When visually changing the terms of the contract, be sure to initial next to each change. The initial marks the change as being made by you instead of someone else,” says John Berry, CEO and Managing Partner at Berry Law. “Otherwise, it can get confusing determining who wants to make which change and who’s the one marking up the document!”
In many cases, contract updates have a lot of back and forth. Being able to keep track of who changes what is vital to ensure everyone agrees with the new contract language.
Replace Sections or Clauses
You can also replace complete sections or clauses with new language or information. You can start by visually crossing out or scratching off the language you want to remove, then typing or writing the updated version and stapling it to the current contract document.
Describe Contract Amendments
To be even more specific, and to avoid visually messing up an existing document, you can describe amendments (or addendums) in a new document stapled to the back of the current contract. For instance, you can outline a specific line or section that you wish to amend, followed by your specific recommendations or requests.
Amendments vs. Addendum
As you make changes to your contract’s language or included features, you need to determine whether you are making an amendment or an addendum.
An amendment, simply put, is a change to an existing contract or agreement. In some cases, an amendment will make direct reference to prior contract language to either reverse or eliminate it or to add on to it.
In contrast, an addendum is an addition to an existing contract. It does not necessarily or usually remove current language or parts of a contract. For instance, you may decide to add an addendum to a contract if you want to stipulate additional employee responsibilities.
When adding an addendum, you don’t normally need to cross out existing language or make direct modifications to the existing language. Instead, you can simply add the addendum to the bottom of the contract or to the appropriate section/chapter. “Addendums are useful if your contract overall is solid, but you want to clarify a few things about its terminology,” says Natalia Morozova, Partner at Cohen, Tucker & Ades P.C..
Get Everyone to Sign the New Contract
Naturally, the last step to updating a contract or its language is to get everyone to sign a new and updated version of the contract.
If you wrote directly on the contract’s paper or otherwise marked it up, you should create a “clean” copy of the contract with clear and legible writing or typed text. Then, you’ll need to send that updated version of the contract to everyone it involves, such as workplace employees, clients, officers, or anyone else.
“A clean copy of an updated contract is absolutely vital,” says Max Schwartzapfel, CMO at Fighting For You. “For starters, it’s annoying to have to read through a lot of red ink. But more importantly, a clean copy marks the contract is finally updated and ‘official’, which is more important than you may think.”
Only once everyone signs the contract and you receive the signed documents back is the contract legally binding with its new stipulations or requirements. Be sure to copy new contracts and to store them in company file cabinets or other places so you always have your updated documents to reference if necessary.
Conclusion
Ultimately, knowing how to update your company’s contract language is crucial if you want to make sure your workers, clients, and officers perform their duties correctly and don’t breach important responsibilities. With the right contract language, you can set up a thriving workplace organization. Keep the above tips in mind and don’t hesitate to contact an attorney to look over a new contract or contract changes before signing on any dotted lines!
