Ready-to-Use Side Letter Agreement Contract Template
This ready-to-use side letter agreement template helps parties record additional or supplementary terms connected to a main commercial contract. It is designed to clarify scope, payment, deadlines, confidentiality, and the relationship between the side letter and the underlying agreement.
A side letter agreement, sometimes informally described as a “drawer contract,” is a separate written document that records terms related to a principal contract. It can address matters that the parties do not wish to place in the main agreement, such as a specific commercial concession, a temporary arrangement, or additional obligations. Although it may be brief, it should be drafted carefully because it can create binding duties. A clear template helps the parties identify exactly what has been agreed and how it interacts with the main contract.
What is a side letter agreement?
A side letter is an agreement signed by two or more parties that supplements, clarifies, varies, or records an understanding connected to an existing contract. It should identify the principal agreement precisely and state whether its provisions prevail, amend the main agreement, or apply only to a limited subject.
The expression “drawer contract” may also be used for arrangements that are not disclosed to all relevant stakeholders. That practice can create serious legal, regulatory, accounting, and governance risks, particularly where the arrangement conflicts with a disclosed contract or is intended to mislead third parties.
Common business uses
Businesses may use a side letter to document a one-off discount, an extended delivery deadline, additional services, a short-term exclusivity commitment, or a settlement of a specific operational issue. The document should never be used to conceal unlawful terms or evade mandatory disclosure obligations.
Key information to include
The agreement should name the parties, state the date and place of signature, and provide enough detail to identify the main contract. It should also set out the supplementary terms in plain, specific language, including dates, amounts, responsibilities, and any conditions that must be met.
| Document field | Purpose | Frequent error |
|---|---|---|
| Principal agreement reference | Links the side letter to the correct contract | Using an incomplete title or no execution date |
| Supplementary terms | Defines the additional rights and obligations | Using vague wording such as “reasonable support” |
| Effective date and term | States when the provisions begin and end | Failing to address expiry or renewal |
| Priority clause | Explains what happens if documents conflict | Leaving inconsistent clauses unresolved |
| Signatory authority | Confirms each signer may bind the party | Having an unauthorised person sign |
How it relates to the main contract
A well-drafted side letter should say whether it forms part of the principal agreement. It should also specify which clauses of the principal agreement remain unchanged and whether the side letter overrides any conflicting provision.
Priority and consistency
Where the parties intend the side letter to amend the original contract, the wording should be direct. If the main agreement requires amendments to be in writing and signed, the side letter must satisfy that requirement and any applicable formalities.
Editable template
Document template
SIDE LETTER AGREEMENT
Place: ____________________
Date: ____________________
This Side Letter Agreement (the “Side Letter”) is entered into by and between:
Party A: ____________________, a ____________________ organised under the laws of ____________________, with registered address at ____________________, represented by ____________________.
Party B: ____________________, a ____________________ organised under the laws of ____________________, with registered address at ____________________, represented by ____________________.
Party A and Party B are together referred to as the “Parties.”
Background: The Parties entered into the agreement identified below (the “Principal Agreement”). The Parties wish to record the supplementary terms set out in this Side Letter.
| Principal Agreement title | ____________________ |
| Principal Agreement date | ____________________ |
| Subject matter of this Side Letter | ____________________ |
| Amount / consideration | ____________________ |
| Payment deadline | ____________________ |
| Effective date | ____________________ |
| Expiry date | ____________________ |
- Purpose. This Side Letter sets out the following supplementary agreement between the Parties: ____________________.
- Obligations. Party A shall: ____________________. Party B shall: ____________________.
- Payment and performance. Any payment or other consideration under this Side Letter shall be made as follows: ____________________.
- Relationship with Principal Agreement. Except as expressly amended by this Side Letter, the Principal Agreement remains in full force and effect. In the event of a conflict, ____________________ shall prevail.
- Confidentiality and disclosure. The Parties shall treat this Side Letter as ____________________, subject to applicable law and any disclosure obligations.
- Governing law and disputes. This Side Letter shall be governed by the laws of ____________________. Any dispute shall be resolved by ____________________.
- Entire side agreement. This Side Letter constitutes the entire agreement between the Parties on its subject matter and may be amended only in writing signed by both Parties.
Signed by the Parties on the date first written above.
For Party A: ____________________
Name: ____________________
Title: ____________________
Date: ____________________
For Party B: ____________________
Name: ____________________
Title: ____________________
Date: ____________________
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Clauses worth reviewing carefully
The following points often determine whether a side letter can be applied smoothly in practice. Consider the commercial purpose as well as applicable contract law, industry rules, and internal approval procedures.
- A precise reference to the principal agreement and its date.
- A clear description of the additional or amended obligation.
- Payment amounts, currency, tax treatment, and payment deadlines where relevant.
- Confidentiality, disclosure, and record-retention obligations.
- A governing law, dispute-resolution, and priority provision.
Keep a signed copy with the principal contract and ensure that authorised personnel who administer the relationship know which document controls each obligation.
Steps before signing
Before execution, the parties should compare the proposed side letter against the principal agreement and check for inconsistencies. Internal legal, compliance, finance, or procurement review may be necessary depending on the transaction and the parties involved.
- Identify the principal contract by full title, date, and parties.
- Write the additional terms with measurable obligations and deadlines.
- Check whether the main contract permits amendment by side letter.
- Obtain approval and signatures from properly authorised representatives.
Risks of undisclosed arrangements
Undisclosed side arrangements may be problematic where they affect financial reporting, public procurement, regulated transactions, shareholder rights, consumer rights, or third-party obligations. A document that contradicts the stated terms of a transaction can lead to disputes, enforcement issues, or allegations of misrepresentation.
Transparency obligations differ by jurisdiction and sector. If confidentiality is needed for a legitimate reason, use a lawful confidentiality clause rather than treating the arrangement as an unrecorded or misleading agreement.
Frequently asked questions
Is a side letter legally binding?
It can be legally binding if it contains the required elements of a contract, is properly executed, and complies with the governing law and the amendment provisions of the principal agreement.
Can a side letter change the main contract?
Yes, if the parties clearly intend it to amend the main contract and follow any formal amendment requirements contained in that contract or required by law.
Should a side letter be disclosed?
Disclosure depends on the parties, transaction, legal requirements, and the effect of the arrangement. Parties should consider contractual, regulatory, accounting, and governance duties before deciding how to handle confidentiality or disclosure.