You’ve got a contract and want to add to it, but you’re stuck trying to figure out the differences between an addendum vs. appendix — and which one of the two you need.
It’s a relatable struggle, so let’s explore both terms at length below.
- An addendum is an add-on that can be created at any point, even years after the original contract was drafted, as long as all parties agree to it.
- An appendix is created at the same time as the contract and provides extra information or details that are useful (though not critical) to know.
- Both addendums and appendices enhance the base contract, though their uses and applications are different.
- You can only amend a contract with an addendum, not an appendix. These are specifically for making minor adjustments and don’t allow for large changes or a complete overhaul.
What is an addendum?
Before we get into the intricacies of appendices vs. addendums, it’s important to understand what these terms mean
An addendum is an extra clause, clarification, or piece of information that’s added to an existing contract.
For example, you could use an addendum to fix a loophole in the original or to explain something confusing.
For tips on how to write an addendum, check out our guide.
What is an appendix?
An appendix is a piece of supplementary material included with a contract.
It doesn’t contain any clauses or items that are vitally necessary to understand the document but rather information that enhances the main body of the contract.
For example, an appendix for a contract detailing the terms of a collaborative project might include a schedule.
While the contract would make sense without it, the schedule provides context and creates a clearer image of what the proposed project will look like.
Key differences between a contract addendum and a contract appendix
While they both add to the main body of a contract or legal document, an appendix and an addendum aren’t the same thing.
Here are some of the main differences between them.
An addendum can be added later
Even after a contract has been finalized, you can create addendums to it, provided all parties agree to them.
This includes addendums created months or years after the initial contract was drafted.
That’s not the case for an appendix.
Appendices must be created at the same time as the contract and are almost always included with it.
Appendices cannot change a contract
An appendix exists to supplement what’s already in a contract, but it can’t change its terms.
For example, you might include a schedule or glossary in an appendix but not a new clause.
However, actively amending a contract is possible with addendums, which let you add to the existing terms.
For instance, if your contract previously said something like ‘Neither party will profit from the agreement’, you could add an addendum that says ‘Including by selling or promoting the partnership described’.
This type of change allows you to be more specific.
Addendums need everyone’s permission
In the case of addendums, consent most definitely matters.
Since they have the potential to affect or even alter some of the terms of a contract, they can’t be okayed by only some of the parties they affect.
Rather, you have to get the go-ahead from everyone before adding them to a contract.
Contracts can work without the appendix
While it might contain interesting or relevant details, you can technically read a contract without its appendices and still understand it.
That’s not always the case with addendums.
This is because an addendum has the potential to change the terms of the contract to some extent.
So, while you can theoretically skip the appendix, you should always pay close attention to addendums.
Appendix vs. addendum: When to use each
Next, we’ll cover when you might want to use either an appendix or an addendum.
Adding extra information or context – Appendices
Your contract is finished and looking good in that it’s legally binding and covers all your bases.
However, it relies on some highly technical language that your average layperson — or even professional — might have to look up.
You could save them time by including a list of definitions as an appendix since this would add extra information that helps the contract make sense to the average reader.
Think of this use case as being a little like stapling an extra piece of paper to the back of a printout.
Making a minor change or addition – Addendums
While it seemed to include as much information and detail as it needed to, you’ve recently discovered your contract has a loophole or two.
Instead of drafting a new one or making a major change, you can use an addendum to make a minor adjustment.
This lets you create contract variations that benefit all parties. It also saves you from having to start over.
Providing contextual information – Appendices
If you’ve got extra information that’s relevant but not strictly necessary, it can also find a place in the appendix.
This could include bonus facts that create a richer backdrop, details that don’t need to be included but do add interest, or other supplementary information.
Fixing a small problem – Addendums
Provided an issue is minor, you can patch up existing contracts with an addendum too.
Think of them like band-aids for small cuts or a patch of cloth that repairs a tear.
If the wound is too big or the clothes too torn, however, you may have to create a new contract instead.
How PandaDoc can help take care of all your contract requirements
While it’s important to understand the distinctions between an addendum and an appendix, it’s equally crucial to make sure you know how to create these add-ons.
That’s where PandaDoc comes in handy.
Thanks to our purpose-built contract management software, you can quickly draft any additions you require.
Plus, our large array of templates will help you figure out how things should look and which elements need to go where.
In short, PandaDoc helps you whip up the perfect contract add-on every time, regardless of the specific addition you’d like to include.