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There is some kind of existential [[paradox]] here. You know how the JC loves a [[paradox]]. In the sense that they are cosmetic artefacts, designed to give one appearance while delivering a different reality, the [[JC]] denounces side letters as stupid, unbecoming things, with which no sensible [[legal eagle]] should ever have truck. But being a pragmatic fellow he also recognises there will be times where a [[legal eagle]]’s [[ditch tolerance]] is not so great that she will go to the wall to avoid having such truck. Look, no-one’s ''proud'' of a side letter — you don’t put an unusual facility with side letters on your CV, or write learned tomes about them, but sometimes you have to do what you have to do, you know? Life’s complicated. | There is some kind of existential [[paradox]] here. You know how the JC loves a [[paradox]]. In the sense that they are cosmetic artefacts, designed to give one appearance while delivering a different reality, the [[JC]] denounces side letters as stupid, unbecoming things, with which no sensible [[legal eagle]] should ever have truck. But being a pragmatic fellow he also recognises there will be times where a [[legal eagle]]’s [[ditch tolerance]] is not so great that she will go to the wall to avoid having such truck. Look, no-one’s ''proud'' of a side letter — you don’t put an unusual facility with side letters on your CV, or write learned tomes about them, but sometimes you have to do what you have to do, you know? Life’s complicated. | ||
==Sensible uses for things that ''resemble'' side letters, but are’t== | |||
There are ''some'' sensible applications for approaches that look like side letters — auxiliary agreements, call them — but they are far fewer and further between than the number of side letters one encounters in real-life. | |||
*'''Arrangements to cover multiple contracts''': If, say, you have a cash trading arrangement and a synthetic trading arrangement, and they are governed by different masdter contracts ([[terms of business]] for | |||
As best as I can figure out, they are these: | |||
*'''Arrangements to cover multiple contracts''': If, say, you have a cash trading arrangement and a synthetic trading arrangement, and they are governed by different masdter contracts ([[terms of business]] for the former, an {{isdama}} fo the latter) and you want to agree, say, a commission-sharing arrangement that would apply to both of them, then a “side letter” — except that it isn’t a side letter, it is really a separate standalone agreement, truth be told — is the best way of doing that. | |||
*'''Arrangements between some but not all parties to a contract''': If you are lucky enough to be a party to a multilateral contract — an inter-creditor agreement, or a principal paying agency agreement or something — you may wish to make private arrangements with one or other counterparty but not all of them. | *'''Arrangements between some but not all parties to a contract''': If you are lucky enough to be a party to a multilateral contract — an inter-creditor agreement, or a principal paying agency agreement or something — you may wish to make private arrangements with one or other counterparty but not all of them. | ||
*'''Arrangements struck after the original contract''': you may agree to change or update the terms of an original [[contract]] sometime after its execution. amongst [[ISDA ninja]]s, for example, there is a curious reluctance to “reopen” the terms of a concluded contract – personally I have never understood this, but the fear seems to be you that in doing so may unwittingly open Pandora's box or the unleash the hounds of hell somehow – and if you are of such a fragile constitution you may wish to include updated terms in a separate “[[amendment agreement]]”. However, again, this isn’t really a “side letter” in its purest, absurdest form. But for the record an amendment and restatement of the original agreement is a much smarter thing to do. This is just my opinion. | *'''Arrangements struck after the original contract''': you may agree to change or update the terms of an original [[contract]] sometime after its execution. amongst [[ISDA ninja]]s, for example, there is a curious reluctance to “reopen” the terms of a concluded contract – personally I have never understood this, but the fear seems to be you that in doing so may unwittingly open Pandora's box or the unleash the hounds of hell somehow – and if you are of such a fragile constitution you may wish to include updated terms in a separate “[[amendment agreement]]”. However, again, this isn’t really a “side letter” in its purest, absurdest form. But for the record an amendment and restatement of the original agreement is a much smarter thing to do. This is just my opinion. | ||