Side Letter Template (UK): What To Include And Why

Need to tweak a commercial contract without reopening the whole deal? A well-drafted side letter can be a fast, discreet way to clarify terms, add practical arrangements or record concessions between the parties.

Used properly, side letters reduce risk and keep your commercial relationships on track. Used badly, they can be unenforceable, conflict with your main agreement, or even trigger regulatory issues.

In this guide, we’ll explain when to use a side letter template, what to include, how to sign it correctly under UK law, and the traps to avoid so you stay protected from day one.

What Is A Side Letter (And When Should Your Business Use One)?

A side letter is a short, separate agreement that sits alongside your main contract. It’s used to clarify how certain terms will operate in practice, grant a limited concession, or address issues that popped up late in negotiations (or after signing) without changing the rest of the deal.

Typical business uses include:

• Operational clarifications - for example, reporting formats, named points of contact, or onboarding milestones.
• Commercial concessions - such as a one-off discount, extended payment terms for the first order, or a temporary waiver.
• Confidential matters - agreeing that sensitive pricing or rebates will be kept confidential from third parties or group companies.
• Conditions precedent - recording items the parties must do after signing but before full rollout.
• Local law tweaks - clarifying how a global master agreement applies to your UK operations.

Side letters are common in procurement, distribution, SaaS, real estate and shareholder deals. They’re highly useful, but they still need careful drafting. If the change is big, or long-lasting, you might be better off with a formal amendment or addendum to the main agreement rather than a side letter.

If you want a deeper dive into how these agreements work in practice, you can read about side letters as a tool for clarifying contract details.

Are Side Letters Legally Binding In The UK?

Yes - if they’re drafted correctly. Under UK law, a side letter is just a contract or deed by another name. To be enforceable as a contract, it needs:

• Offer and acceptance - clear, definite terms agreed by both parties.
• Consideration - each party gives something of value (e.g. a concession, discount, or promise).
• Intention to create legal relations - business agreements are presumed to be intended as legally binding.
• Certainty - the wording must be specific enough to be performed.

If the side letter is unilateral (only one party promises something) or you’re worried about lack of consideration, execute it as a deed instead. That removes the need for consideration, but you must follow the formalities for executing deeds (for example, correct signatures/witnessing depending on whether the party is an individual or a company).

Key enforceability considerations:

• No oral modification (NOM) and variation clauses - many contracts say they can only be varied in writing and signed by authorised representatives. A side letter needs to meet those requirements if it affects the main terms. If you need a broader change, consider amending contracts through a formal written variation.
• Entire agreement clauses - your main agreement may say it’s the whole agreement between the parties. That’s fine, provided your side letter is expressly carved out as a supplemental document.
• Authority to sign - ensure the signatories have authority under company law and the contract. Board or shareholder approval may be needed for material concessions.
• Third party rights - check the Contracts (Rights of Third Parties) Act 1999 and any clause excluding it. If third party rights are excluded in the main contract, mirror that position in the side letter unless you intentionally intend to grant rights to others.
• Consistency - if a side letter conflicts with the main contract, you can end up with uncertainty or unenforceable provisions. Include an “order of precedence” statement and draft carefully to avoid contradictions.

Finally, remember that email exchanges can create binding agreements if the contract allows written notices and variations by email and the parties intend to be bound. If you’re negotiating by email, be aware of the risk and consider formalising via a signed side letter to avoid ambiguity. For context, it’s worth understanding when emails can be legally binding under UK law.

What To Include In A Side Letter Template

Your side letter template should be short, focused and easy to apply across deals - but still robust. Here’s a practical structure and the clauses to consider.

1) Parties, Background And Purpose

• Parties - mirror the party names and company numbers from the main contract.
• Background - one or two recitals referencing the main agreement (name, date, parties) and the reason for the side letter.
• Definitions - only if you add new defined terms; otherwise, rely on the main agreement’s definitions.

2) Core Operative Terms

• Precise concession or clarification - state exactly what is being varied, waived or clarified. Avoid vague phrases like “best endeavours to support” unless you really mean them.
• Scope and limits - specify whether the change is one-off, applies to the first 3 months, certain SKUs, a single site, or a particular project milestone.
• Conditions and dependencies - for example, “subject to receipt of purchase order by ” or “provided no invoice is more than 30 days overdue”.
• Order of precedence - state that the side letter prevails to the extent of any conflict with the main agreement, but only for the covered subject matter.

3) Duration And Termination

• Start date - e.g. the date of the side letter or a specified event.
• Sunset/expiry - when the concession ends automatically (helpful for commercial discounts or phased obligations).
• Termination triggers - for breach, insolvency, change of control, or termination of the main agreement.

4) Confidentiality And Disclosure

If the side letter includes sensitive pricing, rebates or negotiation history, include a confidentiality clause. For broader protection across your relationship, it’s common to also have a standalone Non‑Disclosure Agreement underpinning discussions and documents.

5) Compliance And Regulatory Safeguards

• Competition law - be careful with exclusivity, MFN (most-favoured-nation) or resale pricing provisions. If you’re including exclusivity, the wording needs to be proportionate and tailored; for context, see how an exclusivity clause works in agreements.
• Anti-bribery/export control - confirm that concessions don’t breach applicable laws or sanctions.
• Data protection - if the side letter changes data sharing or processing, reflect that in your DPA and privacy notices.

6) Mechanics And Legal Boilerplate

• No waiver of other rights - make it clear you’re not waiving rights beyond the explicit concession.
• Notwithstanding - use a targeted notwithstanding clause to clarify priority without undermining the main agreement.
• Governing law/jurisdiction - usually mirror the main agreement.
• Variation and notices - state that the side letter itself can only be varied in writing and how notices must be served.
• Execution block - make sure signature blocks match each party’s capacity (company, LLP, individual) and meet UK execution requirements.

Side Letter Vs Addendum Vs Amendment: Which Should You Use?

All three are tools to change or fine‑tune a deal - the right choice depends on what you’re trying to achieve.

• Side letter - best for narrow, practical clarifications or short‑term concessions where you don’t want to reissue the main contract. It’s separate, quick and often confidential.
• Addendum - a short document attached to the contract that adds extra terms. Good when you’re adding new, self‑contained provisions to the existing agreement.
• Amendment/variation - used when you need to alter existing terms (e.g. price, term, service levels) for the long term. If consideration is uncertain, use a deed. For a deeper comparison of these approaches, see addendum vs amendment.

If you’re making material changes that re‑price the deal, expand obligations, or will continue for the life of the agreement, a formal amendment may be cleaner than a side letter. In some cases, a Deed of Variation is the right vehicle, especially where only one party is granting a concession and consideration is not obvious.

How To Draft, Execute And Store Your Side Letter (With Common Pitfalls)

Here’s a practical, step-by-step process to take your side letter from decision to a signed, enforceable document - plus the mistakes to avoid along the way.

Step 1: Confirm The Right Legal Vehicle

Ask yourself: is a side letter sufficient or should you vary the main contract? If the change is narrow, time‑limited or confidential, a side letter is ideal. If it resets core obligations, consider a formal variation. If in doubt, review your variation clause and follow a clear process for amending contracts.

Pitfall: Using a side letter to make sweeping, permanent changes to price, scope or liability. That can create inconsistencies and disputes over which document governs. Use an addendum or deed when the change is substantial.

Step 2: Check Contract Constraints

Read the main agreement’s:

• Variation clause - does it require a deed, board approval, or a specific method (e.g. wet‑ink signature)?
• Entire agreement clause - make sure the side letter is expressly “supplemental” to avoid arguments it’s excluded.
• Order of precedence - if schedules conflict, ensure your side letter clearly overrides for its subject matter only.

Pitfall: Ignoring a “no oral modification” clause but relying on informal emails to make changes. If your contract says written, signed variations are required, email exchanges may not be enough unless they meet those requirements.

Step 3: Draft Clear, Limited Terms

Keep the side letter short and focused. Name exact clauses impacted and set a clear scope, timeline and conditions. Avoid fuzzy words that invite dispute later (e.g. “support where possible”).

Pitfall: Vague concessions like “supplier will help with marketing”. If you intend specific deliverables, quantify them: number of co‑branded posts, dates, approval process, and any spend caps.

Step 4: Consider Consideration Or Execute As A Deed

If each party is giving something (e.g. extended payment terms in exchange for minimum order volumes), consideration exists. If not, execute the side letter as a deed and follow the formalities for execution.

Pitfall: A one‑sided promise documented as a simple contract with no consideration - it may be unenforceable.

Step 5: Sanity-Check Competition, IP And Confidentiality

Run a quick legal check on any exclusivity, resale pricing, MFN or non‑solicitation terms. Keep confidentiality tight if the side letter reveals margins or rebates. If you’re sharing sensitive information more broadly, use an underpinning Non‑Disclosure Agreement.

Pitfall: Embedding strict exclusivity with no objective limits. If you need exclusivity, ensure it’s proportionate to the deal and clearly scoped - see how an exclusivity clause is typically structured.

Step 6: Align Signatures And Approvals

Make sure the right entities sign (especially in group structures) and that signatories have authority. Where internal approvals are required (board/minute), obtain them before execution.

Pitfall: The wrong group company signs the side letter while the main agreement is with another entity - your concession may not bind the intended party.

Step 7: Execute Properly And Store With The Main Contract

Follow the contract’s variation clause for signing method. If you’re executing as a deed, follow the Companies Act formalities (e.g. two authorised signatories or a director in the presence of a witness for an individual).

After signing, store the side letter with your main contract and notify the teams who need to implement it (finance, account management, operations). Update any affected schedules, order forms, or internal SOPs.

Pitfall: Signing a side letter and then forgetting to update your billing system or delivery team - this is how concessions get missed and disputes arise.

Step 8: Plan The Exit

If the concession is temporary, include a clear expiry date or a milestone that ends it automatically. Diary forward dates to avoid missing an expiry and accidentally extending a discount or waiver.

Pitfall: “Silent rollovers” where temporary terms continue simply because no one tracked the end date.

Bonus: Keep The Template Tight - But Tailor Each Deal

It’s smart to maintain a short, company‑approved side letter template with standard boilerplate. But don’t rely on generic wording for complex changes. When the stakes are higher, get legal input to tailor the language and ensure it meshes with your base contract.

Example Use Cases You Can Adapt

To help you visualise how a side letter template works, here are common examples you can adapt with proper legal review.

• Onboarding extension - “Notwithstanding clause 4.2 (Go‑Live Date), the Customer may extend onboarding by up to 30 days upon written notice, provided the Customer pays the Implementation Fee by . This concession expires on .”
• Introductory discount - “Supplier will apply a 10% discount to Purchase Orders placed by 31 March 2026 in respect of SKUs listed in Schedule 1. The Parties agree this discount is confidential and shall not be disclosed except as required by law.”
• Payment terms for first order - “For the initial Order Form only, payment terms under clause 7.1 are 30 days from invoice date, reverting to the Standard Payment Terms thereafter.”
• Site access protocol - “The Parties agree the access protocol in Annex A will apply for the first 8 weeks of Services. In the event of conflict with the Statement of Work, Annex A prevails for access and induction matters only.”

Notice the tight scoping, time limits and order‑of‑precedence language. A carefully positioned notwithstanding can be helpful here, but keep it narrow to avoid unintended spill‑over into other provisions.

When Not To Use A Side Letter

There are times when a side letter isn’t the right tool:

• Material, permanent changes to price, liability caps, service levels or IP ownership.
• Multiple interlocking changes across the whole agreement (you’ll create a patchwork that’s hard to read).
• Where the main contract requires a deed for any variation (and you can’t meet deed formalities).
• When lenders, auditors or regulators will scrutinise the deal - they may prefer a consolidated amendment.

In these cases, a short form amendment or Deed of Variation is often cleaner. If you’re unsure, map the change against the main contract and choose the method that keeps the legal picture simple and coherent.

Key Takeaways

• A side letter is a separate, short agreement that clarifies or temporarily adjusts parts of a deal without reopening the full contract.
• To be binding, ensure clear terms, consideration (or execute as a deed), correct authority to sign, and consistency with the main contract’s variation and entire agreement clauses.
• Keep your side letter template focused: define the concession precisely, limit scope and time, include order‑of‑precedence wording, and cover confidentiality and compliance.
• Use a side letter for narrow, time‑limited or confidential tweaks; use an amendment or addendum for broader, longer‑term changes - see addendum vs amendment for how they differ.
• Execute correctly (especially if using a deed), store with the main contract, and notify your internal teams so the concession is actually implemented.
• Avoid common pitfalls: vague wording, conflicting terms, missing consideration, ignoring NOM clauses, or over‑broad exclusivity. If you’re unsure, get tailored help before signing.

If you’d like help drafting a robust side letter template, preparing a targeted amendment, or pressure‑testing your contract position, our team can help. You can reach us at 08081347754 or team@sprintlaw.co.uk for a free, no‑obligations chat.