If you work in construction or any other field that deals with contracts, you may have heard the terms “change order” and “supplemental agreement” thrown around. While these terms may seem interchangeable, they actually have different meanings and implications. Let`s take a closer look at the difference between change orders and supplemental agreements.

Change Orders:

A change order is a document that is added to an existing contract to make changes to the original scope of work and specifications. Change orders are typically used to modify the cost, time frame, or scope of a project. For example, if you`re building a house and the client decides they want to add a swimming pool to the backyard, a change order would be used to modify the contract to include the cost and timeline of building the pool.

Change orders can be initiated by either party, either the contractor or the client. However, in order for a change order to be valid, it must be signed by both parties and become an official part of the original contract. Change orders can also be used to add or subtract work from the original contract and to adjust the terms and conditions of the contract.

Supplemental Agreements:

A supplemental agreement is a brand new contract that is drafted to add or modify the original contract. Supplemental agreements are typically used when the changes to the original contract are so significant that a simple change order would not suffice. For example, if the client wants to change the entire design of the building halfway through the project, a supplemental agreement would be needed to outline the new scope of work and specifications.

Supplemental agreements are also used when the changes to the original contract are not covered by the terms and conditions of the original contract. For example, if the original contract did not include any provisions for overtime pay but the new work added to the project requires overtime, a supplemental agreement would be needed to address the new compensation.

Conclusion:

In general, change orders and supplemental agreements are used to modify existing contracts. However, change orders are used for minor changes to the original contract while supplemental agreements are used for significant changes that cannot be addressed with a simple change order.

If you`re working on a project that requires changes to the original contract, it`s important to understand the difference between change orders and supplemental agreements. This will ensure that you`re using the correct document to modify the contract and that all parties involved are aware of the changes being made.