Some of them apply to all agreements (I), others concern only certain agreements (II). Although a primary contract and a secondary letter are two independent agreements, the content of the main contract may affect the ancillary contract. Once the validity of the two contracts has been checked separately, the consistency of the two documents will have to be verified. Cohen cited the example of an Arkansas chicken company that needed a larger freezer to store inventory. The company entered into an agreement with a developer to sell the land on which the freezer was to be built and re-lease it for six years to use for the freezer, with the possibility of buying back the property and freezer at fair market value. Instead, a statement made the purchase price of the property the difference between rents and construction costs plus interest. For the most part, the chicken company claimed to have a lease, but it did have credit because of the side agreement. “There are many ways for contract theory to think about secondary agreements and the idea of contract as property.” He concluded by saying, “Sometimes we have to look side to see what`s right in front of us.” Like any contract on the merits, a subsidiary letter presupposes in particular a legitimate object and a non-fraudulent intention of the parties. Therefore, a side letter should not intend to deceive third parties or circumvent binding legal provisions. Fraudulent accessory letters can lead tax authorities to convict companies. In 2003, the Dutch authorities conducted an investigation of Ahold, including examining some of its secondary letters allowing joint ventures to be illegally consolidated in order to improve their accounts. [1] In rare cases, the negotiating parties may use a subsidiary letter to adjust the centre of gravity of the contract if the parties are not yet willing or willing to formally adapt the contract. [2] Other laws also apply to ancillary agreements, Cohen noted.
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