Supplemental agreement

Supplemental agreement
See also
Conditional contract Service lease Reliance letter Termination for convenience Firm fixed price contract Certificate of substantial completion Advance payment bond Retention money Lump-sum contract

Supplemental agreement- any alteration or modification of the terms and conditions of a contract not expressly provided for thereunder may be accomplished only by the execution of a supplemental agreement to the contract with the consent of the surety. Supplemental agreements are the proper means to provide for extra work not originally contemplated and not within the general scope of the contract, for termination of the contract on an equitable basis by mutual agreement, for the making of payments to other than the contractor pursuant to a legally authorized assignment of the contract, and for the modification of any essential requirement of the contract, such as the time of commencement, the amount of retained percentage, etc..

A supplemental agreement is essentially a new, negotiated contract entered into by the parties and is an addendum to the existing contract. Supplemental agreements are used rather than change orders whenever the parties can agree to the need for change, the cost effect of a change, or both. Supplemental agreements need not be made by any specific authority in the contract.

Supplemental agreements must generally be supported by consideration if they are to be binding. The adequacy of such consideration will not, however, be examined by the boards and courts.

Use of supplemental agreements

Supplemental agreements are used to:

• finalize change orders
• accommodate decisions of the boards of contract appeals
• finalize equitable adjustments in connection with other contract clauses
• finalize a termination for convenience
• allow a contractor to complete a contract after non-excusable delay, change contract price
• make major changes in delivery schedule, quantity, quality, or other terms, since the "changes" clause does not permit these types of changes without the consent of the contractor

Beyond the scope of the agreement

A supplemental agreement should be deemed to be "generally beyond the scope of the contract" if one or more of the following circumstances occur:

• the nature of the proposed work under the modification is generally different than that under the original contract
• the quantities of materials and work called for under the modification are substantially beyond those required under the original contract
• the time required for performance of the modification is such that the overall performance time of the contract will need to be substantially lengthened
• the conditions of performance of the proposed modification are materially and substantially different than those of the original contract, in terms such as degree of risk or market conditions.

References

• Cibinic J., (2010), Administration of Government Contracts, CCH Incorporated, Washington.
• Elleman B.A., (2000), Diplomacy and Deception, M.E. Sharpe, London.
• Kulakowski E.C., Chronister L.U., (2010), Research Administration and Management, Jones & Bartlett Publishers, Boston.
• Orders and Regulations, Corps of Engineers, (2000), U.S. Government Printing Office, Washington.

Author: Kinga Krzyściak