LETTER OF INTENT
A Letter of Intent (LOI):
Is a letter setting out tge terms (on a high level) basis that the parties wish to contract.
The LOI can be binding or non-binding – depending on the intention of the parties. Usually the parties are still in negotiation and the definitive terms must still be agreed by way of a definitive contract (usually a joint venture agreement). This depends on whether the Letter of Intent includes the essential terms for the type of contract, which you wish to enter into (ie includes the definitive terms).
This LOI Includes provion for:
- Commencement Date
- Conditions precedent: eg a feasibility study or due diligence investigation
- Allows for a termination notice period
- Provides for confidential information
- Provides for exclusive negotiations
- Disputes clause
This LOI provides for the first step in negotiations and can be used for any project or collaboration. Note, unless the essential terms are agreed, a definitive agreement (eg a Joint Venture Agreement) is still required.
Find a Joint Venture Agreement: Click Here
The Parties can also choose to enter into a Memorandum of Agreement / also known as a Heads of Agreement. This usually implies that the parties wish to enter into a binding agreement as opposed to only indicating their intent to contract.
For an MOU: Click here