Arizona Contractors License Practice Exam

In construction contracts, what is an addendum?

1. A summary of the project

2. A modification to the original contract

3. A termination notice

4. An estimate of costs

The correct answer is: A modification to the original contract

An addendum refers to a modification or an addition made to the original contract. It serves as a formal change that may clarify, alter, or add terms to the existing agreement between parties involved in the construction project. This tool is essential in construction contracting because it allows for adjustments based on various factors that may arise after the initial contract is signed, such as changes in scope, updates to project timelines, or clarification of responsibilities. Understanding the role of an addendum is vital for contractors since it ensures that all parties have a clear and mutual understanding of changes that affect the project, mitigating potential disputes or misunderstandings later on. Other terms in the choices, such as a summary of the project, termination notice, or cost estimates, serve different purposes and do not pertain to the function of an addendum in modifying the original terms of a contract. Thus, the correct characterization of an addendum is indeed as a modification to the original contract.