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What Is a Supplemental Agreement?

Supplemental agreements modify existing contracts.
A supplemental agreement is often ideal in situation where there is no desire to renegotiate an entirely new contract.
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  • Last Modified Date: 03 October 2014
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Supplemental agreements are legally binding documents that are used to modify contracts that are already in force. This type of document is sometimes used as a means of allowing the existing agreement to remain in place with the same ending date, while adding or removing some provisions or terms to the working relationship. A supplemental agreement is often an ideal solutions when there is no desire to renegotiate an entirely new contract to take the place of the current agreement.

This type of agreement has the benefit of making it possible to amend a previous agreement with relatively little effort. The usual process is a negotiation between the client and the provider to determine what changes they agree to make to the contract that currently governs their working relationship. The changes may involve modifying a couple of terms within the current agreement, or possibly adding provisions that cover a new service or product that the client wishes to begin purchasing on an ongoing basis. With this approach, any terms and provisions that are not specifically addressed in the text of the supplemental agreement remain intact, and are considered binding for the duration of the modified contract.

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While many businesses choose to create a new agreement and essentially roll the old contract into the new one, a supplemental agreement eliminates the need for this type of activity. In many situations, creating a new agreement also extends the duration of the contract, a factor that may or may not be agreeable to the customer. With a supplemental agreement, the contract duration is rarely changed. Instead, the terms and conditions that apply for the remainder of the contract period are altered, without committing the customer to a longer term.

There are differences of opinion on the benefits associated with a supplemental agreement approach. Some find this a useful tool in updating existing contracts without the need to go through the process of essentially starting a whole new agreement. Those who feel the supplemental agreement model is somewhat outmoded tend to point out that the addition of supplements to an existing contract can sometimes cause conflicts that lead to difficulties between the two parties involved, due to confusion about the content of the main agreement and the supplement. Creating a new contract, according to those who do not favor the supplemental agreement approach, minimizes the opportunity for confusion, and thus helps maintain confidence and trust between the supplier and the customer.

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everetra
Post 3

@hamje32 - I’ve done some software consulting on the side. I like to have things in writing, so I draw up a consultancy agreement between me and the customer.

However, as everyone knows with software development, things do change. Usually in the consultancy agreement itself there are already provisions that allow for changes to the contract, or the possibility of adding new features to the product which will be billable at the going rate.

However, sometimes the customer will request major changes. In that case I write up an addendum to the main agreement to make it clear what the deliverables will be, and the expected payment. I rarely have to write a new agreement all over again however.

nony
Post 2

@hamje32 - One legal agreement where you often see supplements and addendums is a bill passed by Congress. Amendments, as they are called in this context, are pretty much par for the course. I think it make sense.

I don't see the benefit of rewriting the whole bill, especially since bills already tend to take up too many pages as they are. Also, the amendments have the effect of “rewriting” the bill anyway.

I don’t know if you’ve ever read a long piece of legislation, but it is stuffed with legalese, and only the lawyers know what it really says half the time. So they can make it say something completely different if needed. In either case we will be at the mercy of interpreters to know what’s really in the bill.

hamje32
Post 1

Whether supplemental agreements are good or not depends, I think, on the nature of the agreement and the product or service in question.

I think if a product or service has had a major upgrade since its initial release, then a supplemental agreement is probably not a good idea.

In my opinion, when you change the product or service in a substantial way, then you need to start over, even if you think the old agreement still holds true.

Sometimes people will make changes in a supplemental agreement and say things like older rules are “grandfathered” in, but I’ve never liked that approach. It’s better that you start new and spell everything out, from beginning to end, in my opinion.

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