Side Letters, Incorporation by Reference and Construction of Contractual Relationships Memorialized in Multiple Writings
70 Pages Posted: 26 Apr 2013
Date Written: 2012
Significant business relationships are often memorialized in multiple documents -- sometimes in the form of multiple simultaneous documents, on other occasions with an intentional sequencing of the documents. There can be good reasons for using multiple writings. A number of principles of contract construction and enforcement are not well adapted to this style of contracting. This article analyzes some of the prominent problems.
One inclined to sharp dealing might seek to obtain surreptitiously contractual rights by incorporating by reference advantageous terms. This article shows there are a number of strands of authority that, as a matter of contract construction, i.e., not relying on nebulous principles of unconscionability, limit the effectiveness of that strategy. This article further examines judicial application of various interpretative bromides to contractual relationships memorialized in multiple writings, illustrating how they can impede implementing the parties’ evident intent. Lastly, this article briefly examines the interplay between the parol evidence rule and the principle that multiple writings are construed as a single instrument, highlighting the technique of construing different writings as one can be used to evade application of the rule.
Keywords: contracts, side letter, incorporation by reference, interpretation, parol evidence rule
JEL Classification: K12
Suggested Citation: Suggested Citation