Tag Archives | Letter of Intent

Letter of Intent

There are numerous types of contracts that will be important during the life of your business. An example is a letter of intent, which is often used for doing a particular deal. A letter of intent conveys to each party that the other is serious about doing the deal.

There are two differing thoughts as to how to draft a letter of intent.  One suggests that letters of intent should be short and to the point, highlighting the key points of the proposed deal.  The second says that letters of intent should be fairly detailed, addressing every major point of the proposed deal.  Which version works for you depends both on the circumstances of the particular deal and your personal preference.  The more detailed the letter of  intent, the more assurance there is of a meeting of the minds between the parties (though of course, that is not guaranteed).

Letters of intent often include certain basic terms, such as the confidentiality of ongoing discussions, the basic structure of the deal, the price and terms of the deal, the key obligations of each of the parties, the proposed closing date, whether or not negotiations are exclusive between the parties, conditions to be met prior to closing, and what obligations of the letter of intent are legally binding upon the parties.  These are just examples, and each letter of intent should be specific to the particular deal to which it applies.

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