This article is written by Kshitij Pandey, pursuing a Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from Lawsikho.

Introduction

Addendum and appendix both are attached to the main document. As a general principle, the use of one term in place of another to refer to an attachment with a document, report or contract is governed by convention, and mainly, depends upon the context of the agreement. The significance and effect of an attachment and the specific label may be dealt with by defining the terms and referring to the attachments in the main document/report/contract. In a legal contract, generally, multiple attachments are enclosed with the main contract. In most cases, these attachments do not alter the original/main contract document. These attachments may be termed as schedule, exhibit, annex, supplement, appendix. Out of these different attachments, the appendix is used as an integral part of the contract and effectively it may have critical information, which improves legitimacy to the contract. Addenda and amendments to contracts are also supplementary documents, which are many times used to add critical conditions related to the performance of the contract.  An addendum is a general practice to include additional provisions in a contract. Different attachments like appendix and addendum are used in contract documents depending upon different states of affairs. In contract management, these attachments have a vital role while interpreting the contracts.

What is an appendix?

An appendix is derived from the Latin term, “appendere” meaning “hang upon”. According to Black’s Law Dictionary, an appendix is “a supplementary document attached to the end of writing. Thus, an appendix is a supplementary material, which is attached at the end of contracts. It is part of the agreement to supplement the content of the main document. Besides providing additional material, it may have vital importance, in some cases, for enhancing the validity of a legal document by explaining in detail certain phrases, or terms or conditions. 

In general terms, an appendix is more closely associated, with the main document, as compared to other supplementary documents like annexes. Thus, an appendix may not have much independent value. Though, the appendix certainly augments the information to the main legal document by adding important details like old reference cases, maps, diagrams etc. it is seldom referred to as a separate document, having an independent identity in itself. 

The appendix supplements the body of a document, providing detailed information, which everyone may not want to read except to delve into the details of information placed in the main document in brief for the sake of brevity. It contains the information, which may not be prudent to be put in the main document. However, its references are given in the main document. An appendix is also used to expand the knowledge of the main text by furthering the information provided in the main documents. Hence, the information which is not very much relevant to the main finding, but it backs the analysis, validates generalizations and strengthens the point, is covered in the appendix. Appendices, generally, are statistical, historical or technical. These are added to the contract and usually referenced in the contract. Readers may refer to the appendix for additional information or clarification. For example, in a contract, if some provision refers to a decision taken in a meeting among stakeholders then the exact decision may be part of the main document and details of deliberations in the meeting may become an appendix.  If a reader of the contract wants to know further details of deliberations in a particular meeting, he /she can refer to the appendix.

Appendix to the contract may also be used to define certain terms or make a term clearer with elaboration. Generally, the appendix does not add any new obligations or terms to the contract. But, at the same time, it may be an important attachment that is critical to the validity of the agreement. For example, if a term is used in a contract agreement, which is not generic in nature and for its definition appendix is referred. Then appendix may be critical for interpretation of that term and concerned clause of the contract.

Generally, any kind of information, which is relevant and directly related to the subject can be put in the appendix, but it should have proper references in the main document. The following points should be considered while attaching an appendix to the document:

1. It should be labelled with a number or letter.
2. It should be listed on the index page, under the head Appendix.
3. It must be referred with their respective number or letter, at the appropriate place in the main document.
4. Each appendix should start on a new page.

What is an addendum?

An addendum is derived from the Latin term “addere”, which means “that which is to be added.” An addendum is defined in the Oxford dictionary as “an item of additional material added at the end of a book or other publication.” As per Black’s Law Dictionary addendum is “Something to be added, esp. to a document; a supplement.” Thus, strictly as per definitions, the addendum is meant to add something to a document, but the purpose is not specifically defined. Generally, an addendum is an addition to a contract or document, which is used to add or change or cancel certain portions of a contract. It may be added at any time after writing the document or entering into the agreement with legal validity akin to the main agreement. It may be considered as an additional contract. 

An addendum is used to add additional terms and conditions to an existing agreement. Since it is an addition to the contract, it is governed by the original contract. It is used to capture additional provisions, agreed by both the parties in the contract, which could not be included in the original agreement. 

Depending on usage, an addendum may not be considered as part of the definitive agreement. However, a definitive agreement can refer to addendums as placeholders for future information. For example, a service agreement may use addendums in the form of work orders for new projects. In such a case the main document may contain the general terms and conditions of the agreement, with a provision for the addition of the terms and conditions as well as details of each new project to the main agreement as addendums. In some cases, the main agreement may include a modal work order as an exhibit. Then, the parties would use this exhibit as the standard form for each work order for attaching an addendum in the future. Addendums are normally, preferable to amendments, which are usually more complicated to draft because due to the likelihood of substantive modification in the terms of the original contract.

An addendum may also be used to include extra information received after writing a report or contract. It is also used to add an additional layer of alternative obligations for different kinds of legal relationships. An addendum is added to a previously existing written document. Generally, it is a more detailed explanation of something that is already mentioned in a contract or a change to the contract or an additional term and conditions or a new layer of information. 

An addendum must be signed by all the parties of the contract and it should be in the form of a separate legally valid agreement that is attached to the original contract. For example, a house rent agreement may have several addenda with additional terms and conditions with passage of time from the house owner for additional facilities for a specified enhancement in rent amount or addendum for renewal of the contract after expiry of the original period. A sale contract may be amended by using an addendum for changing the terms of payment, designating the manner and location for delivery of goods, or delineating additional services to be provided by the seller.

Difference between addendum and appendix

Addendum and Appendix are used to supplement the main contract but they contain different kinds of information and serve different purposes. The main difference between addendum and appendix are given in the table: 

Conclusion

Addendum and appendix both are additions required to be made to the main document during its writing or subsequent to it, depending upon usage. These attachments have different purposes, as per context, to provide additional information or to add additional terms and conditions. While the appendix gives extra information and may not have much relevance as far as the legal validity of the contract is concerned, the addendum is used to put additional provisions in the existing contract or even to alter the existing provisions, which have legal consequences.

References

• https://pediaa.com/difference-between-addendum-and-appendix/
• https://www.nolo.com/legal-encyclopedia/how-to-effectively-use-schedules-exhibits-and-addendums-in-your-contracts.html
• https://corporatefinanceinstitute.com/resources/knowledge/other/addendum/
• https://legal-dictionary.thefreedictionary.com/addendum

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