Joinder

What is a joinder?

In contracts, a joinder is how a new party becomes bound by an agreement that others have already signed. Instead of renegotiating and re-signing the whole agreement, the newcomer signs a short joinder agreement saying it joins the existing contract on the same terms as the parties who signed it first.

Example: three founders signed a shareholders’ agreement. A year later, an investor buys shares. The shareholders’ agreement says no one may become a shareholder without agreeing to be bound by it, so the investor signs a one-page joinder. From that moment, the investor has the same rights and obligations as the founders, including transfer restrictions, drag-along and tag-along rights.

The word also has a second, procedural meaning: in a lawsuit, joinder means bringing additional parties or claims into the same case. That is covered briefly at the end of this page.

Joinder agreement vs. amendment vs. assignment

Strictly speaking, adding a party changes the contract, which is why some drafting experts call a joinder a kind of amendment. The difference is in who has to sign. A joinder only works smoothly if the original agreement allows it: well-drafted agreements say who may join, on what conditions, and whose signature is needed to accept them. Without that clause, adding a party usually needs everyone’s consent, the same as any other amendment.

Where joinder agreements are used

The sample clauses above show the usual settings:

1. Shareholders’ and LLC operating agreements. New shareholders or members must sign a joinder before shares or membership interests are transferred or issued to them.
2. Credit agreements and guarantees. New subsidiaries join as guarantors or borrowers, and new lenders join the facility, without re-signing the whole loan documentation.
3. M&A transactions. Shareholders who did not sign the purchase agreement sign joinders, so its terms (such as indemnities and the appointment of a sellers’ representative) can be enforced against them.
4. Support and voting agreements. Additional shareholders join commitments to vote for a transaction.
5. NDAs. Affiliates, co-investors or financing sources join an existing confidentiality agreement.
6. Registration rights and tax receivable agreements. Transferees of shares join to take over the rights that come with them.

Outside corporate deals, the word shows up in two more places: a person joining a pooled special needs trust signs a joinder agreement to the master trust, and a related company that wants to join an existing retirement plan signs a joinder to adopt it. The idea is the same each time: one short document, and the newcomer is bound by rules that already exist.

In the UK and some other jurisdictions, the same document is often called a deed of adherence or an accession agreement.

What a joinder agreement should contain

• Identification of the main agreement, with its date, parties and any amendments.
• The joining statement: the new party becomes a party “as if it had been an original signatory”.
• Its role: as a shareholder, guarantor, borrower or lender, and which defined terms now include it.
• Representations by the new party, such as authority to sign and, for investors, investor status.
• Notice details for the new party.
• Conditions to effectiveness, for example delivery to the agent or satisfaction of conditions in the main agreement.
• Acknowledgment by the company or agent, where the main agreement requires it.
• Governing law, usually the same as the main agreement.

Timing matters more than the wording. Get the joinder signed before shares are transferred, the loan is drawn or the deal closes. A purchase agreement binds the people who signed it or joined it, so a seller who never signed a joinder can be hard to hold to its release or indemnity, and chasing signatures after closing is slow.

Joinder clause in the main agreement

The other half of the mechanism sits in the original contract. A joinder clause says, for example:

Joinder in litigation

In US federal courts, joinder of parties is governed by the Federal Rules of Civil Procedure, and there are two main types. Rule 19 covers required (compulsory) joinder, where a person must be added because the court cannot give complete relief without them or their interests are at stake. Rule 20 covers permissive joinder, which allows plaintiffs or defendants to be joined when their claims arise from the same transaction or occurrence and share a common question of law or fact. Rule 18 covers joining several claims in one case. This procedural meaning has nothing to do with joinder agreements, despite the shared word.

Sending joinders without the paperwork

Joinders are short, repetitive and often needed at the worst moment, such as just before closing. In fynk, the company or agent can sign the joinder template once with pre-signed documents, so every joinder goes out already signed on its side and the new party only countersigns. Each signed joinder can then be linked to the main agreement through related files, so the shareholders’ agreement or loan file always shows who has joined.

Which contracts use joinders?

Shareholders’ and LLC operating agreements, credit agreements and guarantees, merger and purchase agreements, voting and support agreements, NDAs, and registration rights agreements. These free templates provide for a new party to join or be bound:

Related clauses

• Assignment An assignment clause in a contract outlines the conditions under which one party may transfer its rights or obligations to another party. It typically specifies whether prior consent is required for such a transfer and identifies any exceptions to these requirements.
• Amendment An amendment clause outlines the procedures and requirements for making changes or modifications to an existing contract. It specifies how amendments can be proposed, agreed upon, and documented by the parties involved to ensure that all modifications are legally binding and enforceable.
• Counterparts A counterparts clause lets each party sign a separate, identical copy of a contract. Every signed copy counts as an original, and all of them together form one agreement, so the parties never have to sign the same piece of paper.
• Successors and assigns The "Successors and Assigns" clause ensures that the rights and obligations of a contract are binding not only on the original parties but also on their successors, heirs, and any authorized entities they may assign these rights to. This clause provides continuity and enforceability of the contractual terms even if the parties undergo changes in ownership or structure.
• Novation Novation replaces one party to a contract with a new party, or an old contract with a new one, with the consent of everyone involved. Unlike an assignment, the party who leaves is released from its obligations.
• Successor in interest A successor in interest is a person or company that takes over the rights and obligations of another party and stands in its place, for example after a merger, the sale of a business or an inheritance. In contracts, the term decides who may take over the agreement without consent. In US mortgages, it gives heirs and divorced spouses who receive the home the right to deal with the servicer.

Frequently asked questions

• What is a joinder agreement?

  A short agreement by which a new party becomes bound by an existing contract, such as a shareholders' agreement or credit agreement, as if it had signed it originally.

• What is the purpose of a joinder agreement?

  To add a party to an existing contract without renegotiating or re-signing it with everyone. It keeps all shareholders, guarantors or lenders on the same terms.

• Do existing parties need to sign a joinder?

  Usually not, if the main agreement allows new parties to join by signing a joinder. Often the company or an agent must accept it. Check the joinder clause in the main agreement.

• Do you have to sign a joinder agreement when you buy shares?

  If the company's shareholders' or operating agreement requires it, yes. Many agreements make a transfer void, or the company won't register it, until the buyer signs a joinder.

• Is a voting agreement the same as a joinder agreement?

  No. A voting agreement is a commitment about how shares will be voted. A joinder is the document a new shareholder signs to become a party to an existing agreement, which can be a voting agreement.

• What is the difference between a joinder and a novation?

  A joinder adds a new party alongside the existing ones. A novation replaces a party: the new party takes over and the old one is released.

• What does joinder mean in a lawsuit?

  Bringing additional parties or claims into the same case. In US federal courts, Rule 19 covers required joinder of parties and Rule 20 covers permissive joinder.