Other laws also apply to ancillary agreements, Cohen noted. For example, ancillary agreements may themselves be evidence of securities fraud. Secondary parties such as Merrill Lynch could be subject to aid and assistance laws, which can be both a crime and a civil injustice, while private actions for damages for aid and assistance in securities fraud are no longer permitted. Their distribution and IR teams are probably willing to make the « extra mile » to close a sale with a customer, but if that « additional mile » involves an « incidental » agreement to lend money to the customer to complete the deal, it`s time to reassess the transaction. 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.
Ahold was later convicted of fraud by the SEC. Letters of condolence should also respect international law and order to be valid and applicable. Third, by amending the terms of the primary contract, the letter could change the characterization of the whole agreement. In France.B certain management leasing contracts are entered into by parties to conceal the actual qualification of a contract, i.e. the purchase of the company. 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. « The most worrying thing, at least in my view, is that the courts are almost completely unaware of the effects of enforcement or non-application on the interests of third parties. » 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.