JOINDER AGREEMENT

Leezer Kaur
Apr 18, 2023
3 min read

“Written by Leezer Kaur, a 3rd-year B.A.LL.B. student at Army Institute of Law, Mohali”

Introduction

The term ‘agreement’ is provided under Section 2(e) of the Indian Contract Act, 1872, as a promise for some valid consideration. A Joinder agreement is an agreement that facilitates the addition of a new party to an existing agreement. Only the new party or the legal representative on its behalf is supposed to sign a joinder agreement. It can be signed by two or more two new parties as well. As we all know that an agreement is binding only on the parties to such agreement and not to others but signing a joinder agreement makes the terms and conditions of existing parties binding on the new party joining the agreement. It prevents all existing parties from entering into a new agreement to add a new party to their agreement.

Particulars to be provided in such Agreement

A joinder agreement must provide for the following particulars:

Name and important details of the new party or parties which are to be added.
It has to be signed by the new parties, so it must contain the signatures of the new parties.
It must also specify if there is some non-disclosure information that is supposed to be kept confidential by the new party to be added.
The date on which it was signed is also supposed to be mentioned in it.
It must specify the type of joinder agreement, that is, if it is a shareholder or trust-related agreement, etc.
It must also specify if some new terms and conditions in addition to that provided in the original contract are to be made applicable to the new party to the agreement.

Use of Joinder Agreements

A joinder agreement is a type of agreement that is used to make the original contract binding on the new parties, which may be added in the future. It does not bother the existing parties to enter into a new agreement to make the new party a party to their agreement. For example, if there are three shareholders in a company who contracted and agreed to abide by some terms and conditions and, in the future, all of them want to add a new shareholder, then they can use the joinder agreement, which has to be signed by the new party. It will make the terms and conditions of the original contract binding on the new party as well.

Joinder agreements are entered into in the following types of contracts:

To add a new party to an existing trust agreement.
To add new partners to an existing partnership firm and to make the existing terms and conditions applicable to it.
In the case of subcontractor agreements, it is used to make the terms and conditions of the original contract applicable to the subcontractor by the client.
New parties can engage in commercial transactions under commercial agreements.
It is also used to add new shareholders to an already existing company.
It can also be used to add a new party to a Limited Liability Company (LLC) to an existing LLC operating agreement.
It is used in corporation shareholder agreements to add new stockholders to existing agreements and make the existing terms and conditions binding on the new parties.
It is used in the case of mergers and acquisitions to make the shareholders subject to the terms and conditions of the existing contract.

Joinder claim

A joinder claim is used by multiple parties who want to bring litigation against the same party; these are of two types:

Permissive joinder allows multiple plaintiffs to join the litigation if it is with respect to the same transaction and related to a common question of law.
Compulsory joinder is one which is compulsory for a party to join because the circumstances are such that without its joining, the dispute could not be resolved.

Conclusion

A joinder agreement is one which is used to add a new party to an existing contract or agreement and make the terms and conditions existing agreement binding on the new party. It prevents the existing parties from entering into a new agreement to add a new party to the agreement. It is mainly used in cases of shareholders, trusts, stockholders, and subcontractors-related agreements.

Reference

'Joinder Agreement', Contracts Counsel, available at: https://www.contractscounsel.com/t/us/joinder-agreement.