However, the validity of side letters has been denied by some courts in specific circumstances.
[1] Side letters are often used in financial or property transactions, or other commercial contracts.
They are usually in the form of a letter signed by parties signatory to the primary contract but can also be an oral agreement.
As part of a business organization's governance strategy, side letters should be under similar controls to any other contractual agreement, as they can have significant financial or operational impact, or expose the organization to risks of many types.
[3] In Barbudev v Eurocom Cable Management Bulgaria Eood and others (2011), the High Court decided that a side letter provided an opportunity to invest on terms to be agreed, and was therefore an "agreement to agree", not a binding contract.