Definition, Overview, and Example of Addendum

Addendum is a document commonly used in business activities of a company cooperating with other companies in carrying out a transaction. However, addendum is often misunderstood both in its meaning and in its application, so business actors need a fundamental and in-depth understanding of addendum. Let’s see through this article.

A. Definition of Addendum

Addendum is a document that explains additional clauses/conditions or articles in a contract made by the parties bound in an engagement. An addendum can be made if there are additions or changes to the provisions previously stipulated in the main agreement. Regardless of its separate existence from the main agreement, addendum remains an integral and inseparable document from the main agreement so that the clauses stipulated in it must be adhered to by the parties making it.

B. The Function and Purpose of Addendum

Basically, the function and purpose of addendum is to address matters that are not included in the agreement. Apart from providing the possibility for the parties to add or change part of the agreement at a later date in case something needs to be added for the benefit of the parties, addendum also serves the function to maintain an agreement so that it is always complied with and agreed upon by both parties, and no party is harmed by the agreement. Furthermore, there should be no compulsion in making an addendum.

Addendums are usually used to change the contents of a contract for certain reasons, such as in the following examples:

Changing an employment contract
Addendum is usually used to change the employee’s employment contract with the company. For example, because the material is late due to a natural disaster or other reasons, while employees can only work when the material is received, the company can increase the working time in the contract through an addendum because the said reasons cannot be prevented or is beyond prediction.
Hiring contractors or freelancers
Addendum is a term that contractors are quite familiar with. Usually, if there is additional time to complete a project because several parties cannot fulfill the promised achievements, then an addendum will be made to clarify the additional time needed.

Contract in renting a house
If a house owner rents out a house to a tenant, and there is a condition that the house owner cannot continue to maintain the place for some reasons so that the tenant has to pay maintenance fees, the house owner can offer changes to the rental agreement for the tenant with a clear reason. If the tenant agrees to the change of the rental agreement, an addendum can finally be made and agreed upon by both parties in order to provide benefits for both parties.

C. Addendum in the Indonesian Civil Code

An agreement of two parties must fulfill the principle of freedom of contract, which is in accordance with Article 1338 of the Indonesian Civil Code (“KUH Perdata“), which stipulates:

“All agreements made in accordance with the law apply as law to those who make them. The agreement cannot be withdrawn other than by consent of both parties, or for reasons determined by law. Approval must be carried out in good faith.”

If the addendum is not in accordance with the provisions of Article 1338, then the addendum is not valid because, in adding an addendum, consent is needed from both parties.

D. Addendum Validity Terms

There are several conditions for an addendum to be considered valid or recognized by law, as follows:

Addendum is compiled to add the contents of the main agreement.
Addendum must be agreed by both parties. If one of the parties does not agree or does not want to sign it, the addendum is declared invalid.
If necessary, the signing can be attended by witnesses.

E. Contents in Addendum

There are several contents that must be included in an addendum:

An addendum must clearly state the names of the parties involved, which can be individuals, companies, organizations, and so on in order that no party is excluded in the addendum;
The font, size, margin and color must be exactly the same as the main agreement; and
There must be a date on which the addendum is made. This part also needs to be signed by both parties because the addendum is invalid if one of the parties is not involved.

F. Addendum Example

Addendum

Number :233/BNT/2022

Date: 18 October 2022

Agreement

Number: 003/BNT/23/2021

Date: 15 August 2022

Considering and following up on the Agreement Letter Number 003/BNT/23/2021 dated August 15, 2022 with the Supplier of goods and work packages, it is deemed necessary to amend to the Agreement.

So therefore:

On Tuesday 18 October 2022, located in South Jakarta address Pacific Century Place, Tower Lt. 26 SCBD (Sudirman Central Business District) Lot 10, Jl. Jenderal Sudirman No.52-53, RT.5/RW.3, Senayan, Kec. Kby. Baru, Kota South Jakarta, Daerah Khusus Ibukota Jakarta 12190, an Addendum to the Agreement has been made with the following results:

I. The Payment Method Per Term Is A One-Time Payment
BEGINNING	3 Termin I : Rp.3.000.000.,- Date 01 January 2022 II : Rp.5.000.000,- Date 04 June 2022 III : Rp.5.000.000,- Date 13 October 2022
AMENDED INTO	1 Time Payment Rp.17.000.000- Date 18 December 2022
II. Work Report
BEGINNING	13.000.000
AMENDED	17.000.000

Accordingly, PPK and the Provider have agreed to sign the Addendum to this Agreement on the date mentioned above.

The parties are expected to be able to implement it in accordance with the provisions of the applicable laws and regulations.

PPK For and On behalf of the Provider

Alexander Herbert Sibuan Yanma Aditya Pratama

***

ADCO Law is a law firm that offers clients a wide range of integrated legal services, including commercial transactions and corporate disputes in a variety of industry sectors.

Over the course of more than a decade, we have grown to understand our client’s industry and business as well as the regulatory aspect. In dealing with the business dynamics, we provide comprehensive and solid legal advice and solutions to minimize legal and business risks.

Should you have more queries regarding this matter, please do not hesitate to contact us

ADCO Law

Setiabudi Building 2, 2nd Floor, Suite 205C

Jl. H.R. Rasuna Said Kav. 62, Setiabudi Karet

Jakarta Selatan, 12920, Indonesia.

Phone : +6221 520 3034

Fax : +6221 520 3035

Email : inquiry@adcolaw.com

Disclaimer: This article has been prepared for scientific reading and marketing purposes only from ADCO Law. Accordingly, all the writings contained herein do not constitute the formal legal opinion of ADCO Law. Therefore, ADCO Law should be held harmless of and/or cannot be held responsible for anything performed by entities who use this writing outside the purposes of ADCO Law.