Legal Question in Business Law in California

Such changes become part of the contract if both sides agree to them, but not if one side makes the change unilaterally.

To elaborate on Mr. Hoffman's answer: Where you usually see that kind of hand written change with initials is when last minute changes are made to a contract BEFORE it is signed. Rather than retype the contract, or go to a computer and edit it and reprint it, parties will just make simple last minute changes or corrections by hand. The initials are confirmation that the changes were made by agreement, rather than unilaterally after the contract was signed. If the parties want to change a contract AFTER it is signed, technically they could do it the same way, but it is far better either to write up a new contract, or write up a separate modification, sometimes called a "novation," to make the changes. The reason for this is that a change to an existing contract requires new consideration in order for the change to be valid. So just changing the existing document by hand is not very clear because it doesn't reflect the consideration for the change.