A side letter of agreement, also referred to as a side letter or side agreement, is a legally binding document that is often attached to a primary agreement or contract. It is a document that outlines specific terms and conditions that are not included in the original contract but are agreed upon separately by both parties.
Side letters of agreement are commonly used in business transactions to deal with specific issues or concerns that are not covered in the initial contract. They may address topics such as payment terms, delivery dates, warranties, or any other provisions that were not adequately addressed in the original agreement.
One of the advantages of a side letter of agreement is that it allows both parties to reach a mutually acceptable arrangement on specific issues without having to renegotiate the entire contract. This can save time and resources while ensuring that both parties are satisfied with the terms of the agreement.
Side letters of agreement are often used in the real estate industry, such as in lease agreements or purchase contracts. For example, a side letter may be used to specify the delivery date for a property or to clarify the responsibilities of each party in the transaction.
In addition to the advantages of convenience and flexibility, side letters of agreement can also enhance the enforceability of the underlying contract. By clarifying specific terms and conditions, a side letter can prevent misunderstandings or disputes that may arise in the absence of such a document.
Despite the benefits of side letters of agreement, it is important to ensure that they are drafted carefully and accurately. As with any contract or legal document, it is crucial to seek the advice of a qualified attorney to ensure that the terms of the side letter are enforceable and legally binding.
In conclusion, a side letter of agreement is a useful tool for addressing specific issues or concerns that are not included in the original contract. By providing a more detailed and comprehensive understanding of the terms of the agreement, a side letter can help prevent misunderstandings or disputes and enhance the enforceability of the underlying contract. If you are considering using a side letter of agreement in your business transactions, it is important to seek the advice of a qualified attorney to ensure that all legal requirements are met.