A Letter Of Agreement
What is a letter of agreement? This type of contract documents a legal agreement between two parties. It shall set out in writing the terms of the agreement in order to settle any subsequent disputes that may arise. Oral contracts are sometimes enforceable, but the establishment of a letter of consent reinforces the legality of the contract in question. A valid consent letter is the same as a valid contract. Side letters. In an M&A transaction, correspondence agreements are sometimes referred to as secondary mail. They are agreed in conjunction with a series of transactional documents. Sometimes, when a sales contract is not such as to address an agreement between the parties, side letters are used. A subsidiary letter would raise a topic; a transaction may therefore include several side letters.
Subsidiary letters often refer to a highly sensitive object that is not intended to circulate among all persons involved in the preparation or completion of the transaction. In the context of an M&A transaction, the side letters could relate to pension schemes or an agreement between the parties on the remedies they are prepared to accept when they submit the transaction to the competition authorities for approval (if the inclusion of such an agreement in an acquisition contract may, in error, encourage the competition authority to demand such relief). It may be a declaration of intent in which the nature of the enterprise is not suitable for admission into the body of a SPA. Other sensitive aspects, such as compensation for embarrassing claims, can also be a reason to prepare a side letter. A correspondence agreement is usually printed on the sender`s header and contains the following: In the main part of the letter or memorandum of understanding, list the main points of the agreement and indicate specific and in-depth information as far as possible. This should include some items for sale, space for rent, or services for rent….