What is side letter?

A side letter is a document that is supplementary to a legally binding agreement or contract, which may contain additional terms or conditions that are separate from and not specified in the original agreement. It is an agreement between two parties that is not part of the main contract. Side letters are used in a wide range of contexts, including employment contracts, real estate transactions, and mergers and acquisitions.

The purpose of a side letter is to provide flexibility in regard to the original agreement. It can be used to clarify language, specify additional terms, or modify existing terms of the agreement. Side letters are often utilized when both parties want to maintain the confidentiality of certain parts of the agreement or when time constraints make it difficult to renegotiate the entire contract.

It is important to note that side letters should not undermine the main agreement. Additionally, if there is a conflict between the main agreement and the side letter, the main agreement will take precedence in any legal dispute. Therefore, any modifications or additional terms in a side letter should be carefully considered and reviewed by all parties involved to avoid any potential conflicts.