Legal Definitions - side agreement

Definition: A side agreement is an ancillary agreement that is made in addition to another agreement. It can be a separate agreement that is negotiated to supplement a broader agreement or treaty. For example, NAFTA contains no provisions about labor standards or environmental protection. But two side agreements about those areas were negotiated separately and designed to supplement NAFTA, making the treaty more attractive to the ratifying bodies.

Example: In a business deal, a side agreement may be made between two parties to address a specific issue that is not covered in the main agreement. For instance, a company may enter into a side agreement with a supplier to ensure that the supplier will provide the necessary raw materials at a fixed price for a certain period of time. This side agreement will be ancillary to the main agreement between the two parties.

Explanation: The example illustrates how a side agreement is made to address a specific issue that is not covered in the main agreement. The side agreement is ancillary to the main agreement and is negotiated separately to supplement the main agreement. In this case, the side agreement ensures that the supplier will provide the necessary raw materials at a fixed price for a certain period of time, which is not covered in the main agreement.