Schedules, Exhibits, and Addenda–How They Differ and Pitfalls to Avoid

Music compositions frequently include instructions similar to turn-by-turn instructions in a GPS. If a section is to be repeated, instead of writing the entire section out twice, the composer may provide musical directions to repeat the section.

The composer may put repeat signs consisting of two vertical lines and two dots on the music stave to mark the section to be repeated. Other times, the composer will use the Italian words “da capo” or “D.C”) to tell the musician to go back to the beginning. Or the composer may instruct the musician to go back to a notated sign in the music by saying “dal segno” or “D.S.”

After a musician repeats a section, they may encounter additional instructions. When repeat symbols are in the stave, there may be a second ending to the repeated section to facilitate the transaction into the next section of the composition.

A composer may add “al fine” (to the end) after da capo or dal segno to instruct the musician to end the music when they see the word “Fine.” Or the composer may add “al coda” (to the coda) to instruct the musician to go back and play the passage again until they get to an instruction to jump to a coda or ending section.

A coda (which comes from the Latin word for tail) or codetta (little tail) is a section attached to the end of the composition, which brings the music to a close. A finale also can bring music to an end–usually in a grandiose fashion. Either a coda or a finale can be at the ending of a musical composition, but they are used differently.

Real estate leases, purchase contracts, and contracts frequently include “codas” or “finales,” such as exhibits, schedules, and addenda, attached at the back. Just as it’s vital that musicians follow the composer’s “turn-by-turn” instructions before moving to the coda, it’s crucial that anyone reviewing a lease or contract understand the “instructions” about how these various attachments work with the main legal document. This article discusses how to best use exhibits, addenda, schedules, and amendments with real estate leases and other contracts.

What’s Attached to Your Contract

Exhibits, schedules, and addenda all can be attached to contracts. They usually are agreed to before the contract is signed. Amendments usually are negotiated and signed after the contract. To properly use each type of contract, parties must understand the unique function of each document.

Exhibit

An exhibit is an additional document attached to the end of a lease or contract. An exhibit frequently will include form documents ancillary to the main contract, such as agreed-upon closing documents attached to a real estate purchase contract or documents a tenant must sign, such as a lease guaranty.

Sometimes, exhibits are used to expand upon information in the contract, such as when a real estate legal description is attached as an exhibit to clarify what property is the subject of the contract. Exhibits should be finalized when a contract is signed but exhibits generally should not be signed when the contract is signed.

Schedule

A schedule is also an attachment to the end of the contract. However, schedules usually consist of information important to the contract terms. Schedules frequently include lists or other information that would clutter up a contract and are easier to read in a list or tabular format.

For instance, a schedule to a lease might include a list of known problems with the property and repairs the landlord has agreed to make. In a service contract, a schedule might consist of a price list or a list of services to be provided.

Schedules should be agreed to when the contract is signed but generally need not be signed themselves. Since schedules include information essential to the contract, the contract should state that all schedules are incorporated into the contract.

Addendum

An addendum is also attached to the end of the contract that expands upon its terms. Addenda usually are signed, or at least the form of the addendum is agreed-upon when a contract is signed, and they should be signed separately from the contract itself.

For instance, if a tenant under a residential real estate lease has a pet, it is common to see a “pet addendum” in which the tenant agrees to clean up after their pet and pay an extra pet deposit pet fee. An addendum might also change a pre-printed form contract where the parties have agreed to something that differs from the printed form. This type of addendum is commonly used in a residential real estate purchase contract to add contract contingencies, deadlines, or other requirements that aren’t contemplated in the standard form contract.

Another common use of addenda is where the parties have a master agreement, which generally governs their business arrangement but plan to include specific purchases under the master contract from time-to-time. This is common in the real estate management field, where a property manager may have a master contract with a software provider and then enter into an addendum for each specific property being managed.

Amendment

An amendment changes the contract terms and is signed after the contract or lease is signed. Although amendments aren’t at the end of a contract when signed, some people attach amendments to the back of the contract they modify.

An amendment will refer to specific sections of the contract or lease being amended and will explain how those provisions are being changed. An amendment can have its own exhibits or schedules. Or an amendment may modify exhibits or schedules to a contract.

Common Errors When Using Contract Attachments

It can be confusing to determine whether information should be in an exhibit, schedule, addendum, or even an amendment. Even more important than putting the proper label on a contract “coda” is assuring that document will perform the intended function. Common errors when using these attachments to leases and contracts are discussed below.

Incorporation by Reference Errors

Exhibits, schedules, and other documents separate from a main contract or lease rarely become part of that contract unless they are expressly incorporated by reference into the contract. Therefore, many contract drafters include blanket language that says that “all exhibits, schedules, and addenda to this contract are incorporated by reference into this contract as if fully set forth herein.”

This language works well if it makes sense to incorporate those documents into the agreement. However, parties negotiating the contract need to consider whether they want everything in the exhibits to be incorporated into the contract.

Sometimes, the exhibits should not be incorporated into the contract. For instance, when parties are replacing several old contracts, an exhibit might include complete copies of the previous contracts being replaced. In that instance, it doesn’t make sense to incorporate those entire contracts into the new contract, as doing so could reaffirm the contract provisions the parties want to do away with.

If the entire text of the old contracts is incorporated in the new contract, a merger clause (which states the new contract supersedes the old contracts) might not be effective as to the contracts incorporated into the new contract. On the one hand, the new contract might state it is replacing those old contracts. But by incorporating the old contracts’ entire text into the new contract, the old contract may be deemed to have been reaffirmed–at least regarding contract provisions about which the new contract is silent.

Contract drafters can avoid this concern by excepting items in former versions of the contract in the merger clause.

Confusing addenda and amendments

Usually, an addendum will be attached to a contract and signed by the parties when they signed the contract. Occasionally, the parties will know in advance that there must be an addendum signed later and will attach a blank form of addendum to the contract.

For example, parties to a commercial lease requiring the landlord to make tenant improvements may not know when the lease will start because the tenant improvements need to be completed first. There may be an addendum to be signed once the parties agree on the official lease start date.

Signing Exhibits

Often exhibits consist of agreed forms or documents to be signed later, such as closing documents attached to a real estate contract. A tenant lease might include a form that the tenant is to sign accepting the space when the tenant moves in. Loan documents for a construction project where the money is to be drawn down over time might include as an exhibit a form of construction draw request to be signed when the borrower wants to draw down on the loan.

Not uncommonly, parties signing a contract flip through the contract and sign every signature line–even those on the exhibits. This results in exhibits being signed before it is appropriate to do so. Although most contracting parties are honest, if a party inadvertently signs an exhibit, the signature could later be attached to a document the parties haven’t approved.

Leaving Exhibits or Schedules Blank

Parties frequently negotiate contracts intending to attach required exhibits or schedules later. I usually include a blank placeholder page for each exhibit and schedule to remind myself to complete it. Other attorneys have a list of exhibits and schedules at the end to serve as a reminder.

However, these blank pages and lists rely on the parties actually attaching the completed exhibits and schedules before signing the contract. Often this doesn’t happen, leaving parties open to a later dispute about what the content of those attachments should have been.

Some real estate contract forms include exhibits that can’t be completed before the contract is signed. This might consist of exceptions to representations and warranties from environmental reports not yet ordered or other information that isn’t available when the contract is signed. The expectation is that the parties will agree on the exhibits and attach them later, but frequently the parties never complete these exhibits.

I don’t recommend this practice. If the parties aren’t able to agree to exhibit contents until after the contract has been signed, the contract should include a covenant that the parties will agree upon that information by a fixed date. The contract also should describe what will happen if the parties can’t agree.

Contract Codas

If properly used, contract attachments can make the contract clearer by collecting related information in the same place and by removing unnecessary “clutter” from the contract text.  However, just as composers carefully notate the order musicians are to play the lines in their compositions, and so they know when to go to the coda, contract drafters must tell the reader when to refer to each attachment.

© 2021 by Elizabeth A. Whitman

Any references clients and their legal situations have been modified to protect client confidentiality.

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