Joinder: Overview, definition and example
What is joinder?
Joinder refers to the legal process or agreement by which a new party is added to an existing contract, legal proceeding, or transaction. The new party, known as the "joinder party," agrees to be bound by the terms and conditions of the original agreement as if they were an original party. Joinders are commonly used in multi-party agreements, such as partnership contracts, shareholder agreements, or loan syndications, to simplify the inclusion of additional parties.
Why is joinder important?
Joinder is important because it allows agreements to be extended to new parties without requiring the creation of a new contract or extensive renegotiation. For businesses, this streamlines processes, reduces legal complexity, and ensures that all parties are bound by the same terms and conditions.
For existing parties, a joinder provides clarity and legal certainty about the new party’s obligations, rights, and responsibilities under the agreement. For the new party, it ensures they understand and accept the original agreement, reducing the risk of future disputes.
Understanding joinder through an example
Imagine a group of business partners enters into a partnership agreement to operate a restaurant. A year later, they decide to add a new partner, Mia, to the business. Instead of drafting an entirely new agreement, Mia signs a joinder agreement, which binds her to the terms of the original partnership agreement. This allows Mia to enjoy the benefits and assume the responsibilities of the partnership without altering the original document.
In another example, a loan syndication agreement involves multiple lenders. A new lender wants to join the syndicate after the agreement is signed. By executing a joinder, the new lender agrees to the terms of the original loan agreement and is recognized as a participating lender, simplifying the process of inclusion.
An example of a joinder clause
Here’s how a joinder clause might appear in a contract:
“Any additional party wishing to join this Agreement shall execute a Joinder Agreement, substantially in the form attached as Exhibit A, agreeing to be bound by all terms and conditions of this Agreement. Upon execution of the Joinder Agreement, the new party shall be considered a Party to this Agreement with all rights and obligations therein.”
Conclusion
Joinder is a practical and efficient way to add new parties to existing agreements without redrafting or renegotiating the original terms. It simplifies the inclusion process, provides legal clarity, and ensures all parties are bound by the same obligations and benefits. Including a joinder clause in contracts is essential for businesses seeking flexibility and efficiency in managing multi-party agreements.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.