What is a side letter of agreement?
A side letter— also often referred to as a side agreement or side letter arrangement—is an agreement that supplements, amends, or modifies main contractual provisions. In the private investment arena, the main contractual provisions are the offering documents.
What is a side letter in business?
In its most basic form, a side letter is a written agreement that is ancillary to the primary contract. It may be used to clarify or supplement the original contract. Sometimes, situations arise where it’s easier to make a side agreement rather than modify the whole contract.
How do you write a side letter to a contract?
In order for a side letter to become binding it must satisfy the same criteria that all contracts have to satisfy: (i) offer; (ii) acceptance; (iii) consideration (iv) certainty; and (v) the intention to create legal relations. Offer and acceptance are relatively simple to satisfy, however the other 3 elements are not.
Can a side letter be executed as a deed?
A side letter is a contract and consideration (payment, in any form, under the contract) must be provided. If consideration is not provided, the side letter will not be binding unless it is executed as a deed.
Are side agreements legal?
A side letter is a document that is ancillary to another contract. Although the usual intention is that side letters will give rise to legally enforceable rights and obligations, this is by no means guaranteed and, in some cases, they have nothing more than moral effect.
What makes a letter legally binding?
To be legally binding, a contract must be “supported by consideration”. Some value must pass from each party to the other for the agreement to become a legally binding agreement. Consideration: is a promise, an act, or a promise not to act.
Are side agreements enforceable?
The parol evidence rule of contract law makes side agreements unenforceable in many circumstances, but focuses doctrinally on whether the main agreement is complete enough or whether the side agreement contradicts the main agreement. Other laws also apply to side agreements, Cohen noted.
Can a letter be a legal document?
By itself, a letter is non binding, and is not a substitute for a full legal contract. Neither party is held to the contents. One of the requirements for an agreement to be legally binding is that both sides intended to be bound.
Are side letters legally binding?
A side letter is a document that is ancillary to another contract. Although the usual intention is that side letters will give rise to legally enforceable rights and obligations, this is by no means guaranteed and, in some cases, they have nothing more than moral effect. …
Are letters legally binding?
By itself, a letter is not legally binding, and is not a substitute for a full legal contract. Neither party is held to the contents. One of the requirements for an agreement to be binding is that both sides intended to be bound.
Are side letters legally enforceable?