Contract Modification Law and Legal Definition

Contract modification refers to mutually agreed changes or alterations made to a contract. A contract modification may introduce or cancel specifications or terms of an existing contract, while leaving its overall purpose and effect intact. Contract modification is also called contract amendment.

Valid reasons for contract modification are :


1.To extend a contract

2.To change the duration of a contract ;

3.To change quantity items that fall under the scope of a contract ;

4.To add additional items to a contract;

5.To change payment terms of a contract.

According to 48 CFR 43.103, contract modifications are of the following types:

1.Bilateral modification: Contract modification that is signed by a contractor and a contracting officer. Bilateral modifications are used to:

a. Make negotiated equitable adjustments resulting from the issuance of a change order;

b. Definitize letter contracts; and

c. Reflect other agreements of the parties modifying the terms of contracts;

2.Unilateral modification: Contract modification that is signed only by the contracting officer. Unilateral modifications are used to:

1.Make administrative changes;

2.Issue change orders;

3.Make changes authorized by clauses other than a changes clause (e.g., Property clause, Options clause, or Suspension of Work clause); and

4.Issue termination notices.