What is a supplemental contract?

Supplemental agreements are legally binding documents used to modify contracts that are already in place. This type of document is sometimes used as a means to allow the existing contract to remain in effect with the same end date while some clauses or terms of the employment relationship are added or removed. A supplemental agreement is often an ideal solution when there is no desire to renegotiate an entirely new agreement to replace the current agreement.

A supplemental agreement has the advantage of making it possible to amend a previous agreement with relatively little effort. The usual process is a negotiation between the customer and the supplier to determine what changes they agree to make to the contract that currently governs their employment relationship. Changes may involve modifying some terms within the current contract, or possibly adding clauses that cover a new service or product that the customer wants to start purchasing on an ongoing basis. With this approach, all terms and provisions not specifically addressed in the supplemental agreement text remain intact and are considered binding for the duration of the modified agreement.

While many companies choose to create a new contract and essentially transfer the old contract to the new one, a supplemental contract eliminates the need for this type of activity. In many situations, creating a new contract also extends the duration of the contract, which may or may not be acceptable to the customer. With a supplemental contract, the duration of the contract rarely changes. Instead, the terms and conditions that apply to the remainder of the contract period are modified, without committing the customer to a longer term.

There are differences of opinion about the benefits associated with a lateral agreement approach. Some find this to be a useful tool for updating existing contracts without having to go through the process of starting an entirely new contract. Those who find the supplemental contract model a bit old-fashioned tend to point out that adding supplements to an existing contract can sometimes cause conflicts that lead to difficulties between the two parties involved, due to confusion over the content of the contract. . . Creating a new contract, according to those who do not favor the supplemental contract approach, minimizes the opportunity for confusion and thus helps to maintain trust between supplier and customer.

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