Recent legal developments highlight the importance of making
sure a side letter to a document has all of the elements it needs
to be legally binding, otherwise you could find that you have an
expensive extra piece of paper which has no more than a moral
What are side letters?
A side letter is a legal document used to clarify, supplement or
vary an existing contract. Many people view them as simple
documents but you should be aware that preparing a side letter is
more complex than it seems and if not attended to correctly, could
be ineffective, as illustrated by a recent legal case.
Why are side letters useful?
The common uses for side letters include:
Providing clarification, such as when details become available
which were not known when the contract was originally entered
Supplementing negotiations between parties by providing
additional obligations or exemptions; or
Confirming variations where last minute changes have been made,
where it is not practical or cost-effective to re-draft a
When will a side letter be binding?
A side letter must be properly drafted to be binding on both
parties and there must be a contract in existence, or the main
negotiations for such a contract must be complete at the time the
side letter is entered into. If there is no contract or
negotiations in relation to key terms are still underway, any
side letter in existence will fail.
To ensure a side letter is binding you must have:
An offer made by one party and accepted by another;
An intention to create legal relations – merely
stating that a document is a 'side letter' is not
Clear provisions within the document to allow a court to decide
how to interpret it;
Some form of consideration, such a reciprocal benefit between
the parties (this could be money paid for an exemption).
Consideration cannot be for something in the past.
If any of the above four elements are missing, the side letter
will not be legally enforceable and will effectively be worthless.
It is, therefore, crucial to ensure that your side letters are
properly drafted to avoid costly disputes over what may at the time
appear to be minor "bits on the side".
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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In this instance, the Protector cast himself in a role which went well beyond what was proper and led him to play an overactive part in the management of the trusts in some respects and to neglect his duties in others.
Readers of the bulletin will be aware of the recent discovery, disinterment and identification of what have now been clearly established to be the bones of King Richard III from the site of the former Greyfriars (Franciscan) Church in Leicester.
Companies that need to enter administration have a number of methods available to them to enter into this insolvency procedure.
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