Are Business Contracts Set in Stone?

We tend to think of contracts as being irreversible decrees which are not eligible for alteration or deviation in any form. However, this is not exactly true. Contracts can be modified — sometimes, without you even knowing it. Whether a change in a business contract is something you’re avoiding or striving toward, here’s what you need to know about business contract modification.

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Allowing Business Contract Modification

There are many scenarios in which a modification to the terms of a business contract is desirable. For example, maybe a mutually beneficial need arises for an extension on a deadline, a change to the location or date of delivery, or a change in the quantity of a product being ordered. When this sort of situation occurs, both businesses are likely to want to put the new terms of the deal in writing with a modified contract.

There is one major prerequisite condition to a legitimate contract modification: both parties must be aware of, and agree to comply with, the changes being posed. This applies whether changes are being made to the entire contract, or only a small portion of its contents. If both parties do not agree to the modifications, they may not hold up as enforceable contractual requirements in court.

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Stopping Business Contract Modification

On the other hand, if the contract functions perfectly as it stands, you may want to prevent any modifications from being made to it. There are a few tools you can utilize to that end.

Call for no subsequent modification. If modification is something you wish to avoid, including a no subsequent modification clause in your contract is a smart and relatively simple move that can save your company a lot of hassle down the road. This is a commonly-used clause which means exactly what it sounds like: that no changes will be permitted once the original contract has been approved.

Be specific about who has the authority to make changes. This can help you to avoid trouble stemming from issues with apparent authority. Apparent authority is a legal term which means that an individual presents themselves as having more power than they actually do (hence “apparent”). A person acting with apparent authority can agree to major changes, even if they don’t technically have the power to do so: while the authority in that scenario is only apparent, the ensuing and very real changes to your contractual obligations will not be. Your business should also take care to specify the “what” in addition to the “who.” Be clear that no additional work is to be done or service provided beyond what the contract calls for.

Business deals can be complicated. The attorneys at Berkowitz Klein have over 30 years of experience handling contract modifications, breaches, and disputes. Call us today at (610) 889-3200 (ext. 1) or contact us online to see what we can do for your business.