Side letter

A side letter is a separate, supplementary agreement between contracting parties that modifies, supplements, or deviates from the master contract but is not incorporated into that master contract itself. Examples include discounts, extended payment terms, additional service levels, or exclusivity arrangements. Legally, a side letter is binding, but in practice it disappears when its author leaves: the invoicing or contract system does not know about it, and neither does the new account manager. The result is silently operating against the master contracts terms, with structural revenue or margin consequences. Systematic ingestion and linking to the master agreement prevents this. See also: Solution — Revenue leakage.