The fact that the ancillary agreement is hidden outside of third parties cannot necessarily mean that third parties are deceived. There may be a justification for a secret secondary agreement if the agreement is necessary to protect a trade secret, intellectual property or the privacy of staff. “But even if there are legitimate confidentiality requirements or privacy interests, are secret restrictions still necessary to protect these legitimate privacy interests?” Cohen suggested that, in some cases, the main agreement could explain that it dealt with a confidential matter without disclosing the confidential information themselves, such as an employee signing a contract for not disclosing trade secrets. Moreover, the main agreement itself could be secret or relevant parties could be edited if the main agreement is presented to third parties who have an interest in non-confidential parties. You may be surprised to learn that Sales and IR employees will sometimes reduce “incidental agreements” with the customer, in which the merchant lends the customer a small amount of money needed to grant the loan and complete the agreement. Their first reaction might be, “but it doesn`t happen in my dealership,” and while we hope it`s true, it happens more often than it should. Cohen, an expert in the Enron case, referred to the dissolved company`s agreement with Merrill Lynch, which purported to sell inland shipping vessels operating as floating power plants in Nigeria. No one wanted to buy the barges, but Enron used his ties with the investment giant to enter into an agreement in which Merrill Lynch purchased the boats, allowing Enron to declare the sale as income and profit. The ancillary agreement, which was not submitted to the accountants, provided that Enron would later purchase the vessels at the interest-plus sale price. The rule of proof of contract law renders ancillary agreements unenforceable in many circumstances, but focuses doctrinally on whether the main agreement is sufficiently complete or whether the ancillary agreement is contrary to the main agreement.
Under an exception to the Parol rule of law, where a party has introduced evidence that the main agreement was a fictitious agreement, evidence of ancillary agreements may be considered. “The focus is on the wrong person… In many of these cases, the evidence of the ancillary agreement is very credible because it is the real deal, but the problem is that it is fraud, and the law should sanction fraud [by authorizing the application of the subsidiary agreement]? Cohen said.