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Side Letter Agreement

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SIDE LETTER AGREEMENT

This Side Letter Agreement (this "Side Letter") is entered into as of by and between Client Name: and Recipient Name: .

RECITALS

WHEREAS, the parties are parties to that certain agreement entitled dated (the "Primary Agreement");

WHEREAS, the parties wish to set forth certain understandings, clarifications and limited modifications relating to the Primary Agreement as set forth herein; and

WHEREAS, the parties intend for this Side Letter to be binding in accordance with its terms and to govern the particular matters expressly set forth below.

NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. DEFINITIONS

1.1 Defined Terms. Capitalized terms used but not otherwise defined in this Side Letter have the meanings given to them in the Primary Agreement. For purposes of this Side Letter, the following terms shall have the following meanings: "Effective Date" means the date set forth above; "Subject Matter" means the matters described in Section 2 below.

2. PURPOSE AND CLARIFICATIONS

2.1 Purpose. The purpose of this Side Letter is to document the parties' agreed clarification and limited amendment to the Primary Agreement with respect to the following subject matter:

2.2 Clarification. To the extent there is any conflict between the express terms of this Side Letter and the Primary Agreement with respect to the Subject Matter, the terms of this Side Letter shall control solely with respect to the Subject Matter, and the Primary Agreement shall remain in full force and effect in all other respects.

3. LIMITED AMENDMENT

3.1 Amendment. The parties hereby agree that Section(s) of the Primary Agreement are amended solely to the extent necessary to give effect to the clarifications set forth in this Side Letter. Except as expressly amended hereby, the Primary Agreement remains unchanged and in full force and effect.

4. REPRESENTATIONS AND WARRANTIES

Each party represents and warrants to the other that (a) it has the full power and authority to enter into and perform its obligations under this Side Letter; (b) the execution and delivery of this Side Letter and the performance of its obligations hereunder have been duly authorized by all necessary corporate or other organizational action; and (c) this Side Letter constitutes a valid and binding obligation enforceable in accordance with its terms.

5. CONFIDENTIALITY

The parties acknowledge that the terms and existence of this Side Letter shall be treated as Confidential Information under the Primary Agreement. Neither party shall disclose the terms of this Side Letter to any third party except as compelled by applicable law or as necessary to enforce the provisions of the Primary Agreement or this Side Letter, provided that the disclosing party shall use reasonable efforts to provide prior notice to the other party.

6. NO WAIVER; NO OTHER MODIFICATIONS

No delay or failure by either party to exercise any right or remedy provided under this Side Letter or the Primary Agreement shall operate as a waiver. Except as expressly provided herein, no amendment, modification or waiver of any provision of this Side Letter shall be effective unless made in writing and signed by both parties.

7. NOTICES

All notices, requests and other communications required or permitted under this Side Letter shall be in writing and shall be delivered to the addresses set forth below or to such other address as a party may designate in writing pursuant to this Section.

8. GOVERNING LAW

This Side Letter shall be governed by and construed in accordance with the laws of the jurisdiction selected by the parties: without regard to principles of conflicts of law.

9. ENTIRE AGREEMENT

This Side Letter, together with the Primary Agreement to the extent expressly incorporated herein, embodies the entire agreement and understanding between the parties with respect to the Subject Matter and supersedes all prior oral and written agreements and understandings relating thereto.

10. SEVERABILITY

If any provision of this Side Letter is held to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not be affected or impaired, and the parties shall negotiate in good faith to replace the invalid, illegal or unenforceable provision with a valid, legal and enforceable provision the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provision.

11. COUNTERPARTS; EXECUTION

This Side Letter may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Signature by electronic means or by facsimile shall be effective as an original signature.

12. MISCELLANEOUS

12.1 Assignment. Neither party may assign its rights or obligations under this Side Letter without the prior written consent of the other party, which consent shall not be unreasonably withheld.

12.2 Remedies. The remedies provided in this Side Letter are cumulative and in addition to any other remedies available at law or in equity.

Client Printed Name:

By:

Date:

Recipient Printed Name:

By:

Date:

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What a Side Letter Agreement Is and when parties use it

A Side Letter Agreement is a short, supplemental contract that clarifies, modifies, or records specific understandings between parties to a principal agreement without changing the main contract text. Side letters typically address narrow topics — timing, payment mechanics, confidentiality carve-outs, operational exceptions, or transitional arrangements — and bind only the signatories. They are commonly used in M&A, investment, real estate, and vendor relationships. Because they create contractual obligations, they should identify parties, reference the principal agreement, state effective dates, and be signed by authorized representatives to ensure enforceability under applicable law.

Why use a Side Letter Agreement instead of amending the main contract

Side letters let parties record limited, specific concessions or clarifications quickly and privately, avoiding full contract renegotiation. They preserve the main agreement’s structure while documenting deviations that affect only particular parties or transactions.

Why use a Side Letter Agreement instead of amending the main contract

Who commonly prepares and signs a Side Letter Agreement

Typical users range across deal teams, in-house counsel, finance, and operations depending on the context.

  • Private equity and investors — Investors use side letters to record fee breaks, reporting obligations, or bespoke governance rights for specific limited partners.
  • Real estate parties — Landlords, tenants, and brokers use side letters to document temporary concessions, rent deferrals, or bespoke fit-out timelines.
  • Vendors and customers — Commercial counterparties record limited exceptions, pilot terms, or phased deliveries outside the master services agreement.

The signatory group should match the authority required by the principal agreement so the side letter is binding and operationally effective.

Core parts to include in a professional Side Letter Agreement

A well-drafted side letter is concise but complete: it identifies parties, references the master agreement, and states precise, measurable changes or promises to avoid ambiguity.

Parties

Identify each signatory by full legal name and entity type; include registered addresses and, where relevant, state of formation.

Reference

Cite the primary agreement by title and date so the side letter’s relationship to the main contract is clear and enforceable.

Scope

Define narrowly what the side letter modifies or clarifies, with exact obligations, exceptions, or time-limited relief.

Consideration

State any payment or value exchanged, or explicitly confirm that the side letter is supported by consideration where required by law.

Duration

Specify effective and termination dates, and whether provisions survive termination of the main agreement.

Execution

Provide signature blocks with printed names, titles, dates, and, where needed, notarization or witness language.

Step-by-step: completing a Side Letter Agreement

Follow these steps to prepare, review, and execute a clear, enforceable side letter with minimal risk of dispute.

  • 01
    Draft the text: Write a concise clause that references the main agreement.
  • 02
    Confirm authority: Verify signatory has power to bind their entity.
  • 03
    Legal review: Have counsel confirm enforceability and conflicts.
  • 04
    Execute and archive: Sign, date, and store in the contract repository.

Digital workflow settings to use when routing a Side Letter

Design the online workflow to mirror internal approvals and evidence chain requirements for auditing and compliance.

Field Configuration
Signature placement Place signer name, title, and date fields explicitly.
Conditional fields Reveal payment fields only if consideration applies.
Authentication Use email + SMS or KBA for higher assurance.
Retention policy Auto-save final PDF and audit trail for records.

Typical routing: how a Side Letter moves from draft to enforceable record

A predictable routing sequence reduces delays and preserves evidence of consent and approval.

  • Draft preparation: Author creates the side letter and uploads it to the signing platform.
  • Internal approvals: Legal and finance reviewers sign off or request edits.
  • Signature collection: Platform delivers signing invitations to authorized representatives.
  • Archival: Signed copy and audit trail are stored in the contract repository.

Technical considerations for secure eSigning and eSubmission

Choose a platform that preserves audit evidence, supports required authentication, and exports standard formats.

  • File formats: PDF, DOCX supported
  • Integrations: Salesforce, NetSuite, Google Workspace
  • Authentication: Email, SMS, or KBA

Ensure the platform can provide exportable signed PDFs and an immutable audit trail that shows timestamps, IP addresses, and signer attribution.

Security and compliance features to verify for Side Letter execution

Encryption: TLS 1.2/1.3 in transit
Data at rest: AES-256 encryption
Audit logs: Detailed timestamped trail
Certifications: SOC 2 Type II, ISO 27001
Legal compliance: ESIGN and UETA support
Regulated workflows: HIPAA BAA available

Pricing and capability snapshot for common eSignature providers

Basic pricing and feature availability for typical eSignature vendors. Review each provider’s plan details for exact capabilities and enterprise options.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial Varies Varies Yes, limited Yes, limited
Bulk Send Yes (Premium) Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No

Real-world examples of Side Letter use and outcomes

Practical examples show how side letters resolve narrow commercial issues without renegotiating entire contracts.

Optica Ventures LLC

Brian Fitzgibbons, COO, documented a limited investor reporting concession to align expectations.

  • The side letter covered quarterly reporting timing.
  • The agreement allowed timely fundraising administration while the master investor agreement remained unchanged, avoiding broad renegotiation and keeping investor relations stable.

Martin Properties

Tim Martin, Founder, recorded a temporary rent deferral for a tenant during buildout.

  • The letter set phased payments over six months.
  • This preserved the lease, provided a documented recovery schedule, and avoided a formal lease amendment that would have required broader landlord approvals.

Signatory roles that typically have authority to execute a Side Letter

General Counsel

In-house counsel or outside counsel often prepare and approve side letters; they confirm consistency with overarching legal obligations and advise on signature authority and enforceability.

Authorized Officer

A corporate officer (CEO, CFO, COO) or authorized signatory named in corporate resolutions can execute side letters to bind the entity when required.

Common pitfalls to avoid when preparing a Side Letter Agreement

  • Unclear scope — leaving ambiguous language that creates conflicting obligations with the main contract.
  • Improper authority — having someone without signing authority execute the letter, risking unenforceability.
  • Failure to reference — not clearly citing the principal agreement and date, which can confuse parties about applicability.
  • Inconsistent terms — introducing dates, payment amounts, or obligations that contradict the master agreement.

Legal and commercial risks tied to incorrect or missing Side Letters

Enforceability risk: Side letter may be unenforceable if signatory lacked authority.
Conflict exposure: Conflicting terms can trigger breach claims against either party.
Tax penalties: Incorrect reporting can trigger IRS penalties (IRC §6721)
Contract repudiation: Courts may refuse to enforce ambiguous or oral modifications.
Operational disruption: Relying on informal arrangements can delay performance and collections.
Reputational harm: Disputes over side letters can damage commercial relationships.

Practical tips for accurate, efficient Side Letter completion

Apply consistent procedures and template controls to reduce errors and speed execution while preserving legal clarity.

Use a standard template
Maintain a vetted template that includes party IDs, reference to the master agreement, effective date, precise obligations, and signature blocks to reduce drafting errors and avoid omissions.
Limit scope
Draft the side letter narrowly to address only the issue at hand, reducing unintended conflicts with the principal agreement and simplifying review.
Record authority
Confirm and document signatory authority in corporate records or resolutions before signing to avoid later challenges to validity.
Preserve audit trail
Use an eSignature platform that provides a tamper-evident signed PDF and audit logs showing signer identity, timestamps, and IP addresses.

Frequently asked questions about Side Letter Agreements

Answers to common questions about enforceability, signature methods, and recordkeeping for side letters.


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