Side Agreements: All You Need to Know
When it comes to legal contracts and agreements, we often hear the term “side agreements.” But what exactly are side agreements, and why are they important? In this article, we`ll explore the basics of side agreements, their purpose, and some examples to help you better understand them.
What is a Side Agreement?
In simple terms, a side agreement is an agreement entered into by parties to a main agreement, which is separate but related to the main agreement. It is called a side agreement because it is not a part of the main agreement, but rather exists alongside it.
A side agreement is typically used to clarify or supplement the terms and conditions of the main agreement. It is often used to address issues that are not covered or adequately addressed in the main agreement. Side agreements can be used in a variety of transactions such as partnership agreements, employment agreements, real estate transactions, and licensing agreements.
Purpose of Side Agreements
The purpose of a side agreement is to provide additional protection for the parties to the main agreement. It helps to clarify the rights and obligations of the parties involved, and ensure that their interests are protected. A side agreement can be used to address a variety of issues, including:
1. Confidentiality: A side agreement can be used to maintain confidentiality in a transaction. It can specify the scope and duration of the confidentiality obligations of the parties involved.
2. Indemnification: A side agreement can be used to clarify the indemnification obligations of the parties. It can specify which party is responsible for any damages or losses that may occur.
3. Non-compete: A side agreement can be used to supplement a non-compete agreement in the main agreement. It can specify the geographic scope, duration, and restrictions on the activities of the parties involved.
4. Termination and renewal: A side agreement can be used to supplement the provisions in the main agreement relating to termination and renewal. It can specify the circumstances under which the agreement may be terminated or renewed.
Examples of Side Agreements
To better understand side agreements, let`s take a look at some examples:
1. Licensing Agreement: A licensing agreement is a contract that allows one party to use the intellectual property of another party. A side agreement in a licensing agreement can be used to clarify the rights and obligations of the parties involved, such as the scope of the license and the payment terms.
2. Real Estate Transactions: In a real estate transaction, a side agreement can be used to supplement the purchase agreement. It can specify the conditions under which the transaction may be terminated or the obligations of the parties in case of a breach.
3. Employment Agreements: A side agreement in an employment agreement can be used to clarify the employee`s compensation, benefits, and obligations. It can also specify the circumstances under which the agreement may be terminated.
Conclusion
In summary, a side agreement is a separate agreement that exists alongside a main agreement. It is used to clarify or supplement the terms and conditions of the main agreement, and provide additional protection for the parties involved. Side agreements can be useful in a variety of transactions, including partnership agreements, real estate transactions, employment agreements, and licensing agreements. It is important to take the time to understand side agreements and include them when necessary to protect your interests.
