In the primary contract, special attention should be paid to the choice of the legal provision and the entire contractual clause. The choice of the legal provision may have different consequences that affect the secondary letter. These consequences may result from the application of national international public order policy, national imperative provisions or national rules. If a full contractual clause is included in the primary contract, the letter is concluded under the primary contract. In order to make the date and/or closing time of the two documents visible, the proof is then facilitated. But there is a greater responsibility related to this practice that your employees probably do not know about. When your employees enter into “incidental agreements” with your customers, your distributor may violate your indirect credit contracts with your lenders. For example, the Massachusetts Dealer Agreement (M-T Agreement) contains a language that prohibits these “incidental agreements.” As part of the M-T agreement, a trader who will hand over his contracts to M-T gives a positive image of the fact that the contract submitted to him is the only agreement between the customer and the distributor with respect to the transaction. The merchant also indicates that the amount identified as “down payment” in the sales contract is correct and was actually received by the merchant in the form of a cheque or cash by the customer. An “incidental agreement” between the merchant and the customer is contrary to these provisions and could jeopardize your credit relationship. Even if a primary contract and a letter are two independent agreements, the content of the primary contract may affect the letter.
Once the validity of the two contracts has been verified separately, the consistency of the two documents will have to be verified. Like any contract, as far as its contents are concerned, a letter of sending requires, among other things, a legitimate purpose and a non-fraudulent intention of the parties. Therefore, an ancillary letter should not intend to defraud third parties or circumvent mandatory legal provisions. Fraudulent support letters can lead tax authorities to transfer businesses. In 2003, the Dutch authorities conducted an investigation by Ahold, including some of its subsidiary letters that allowed the illegal consolidation of joint ventures to improve their annual accounts. Initially, a transaction was concluded with the Dutch authorities and the company was fined 8 million euros.