Letters Of Intent

If you are selling or purchasing a business, the first key document that is likely to be involved is a letter of intent. This is a document that sets out in brief terms the agreement of the parties on the principal business terms of the proposed transaction. It is not legally binding, with the exception of some non-business terms. The reason for this is that it enables the parties to reach agreement more quickly on the key business terms without taking the time at the early stages of the transaction to try and negotiate the more detailed legal terms such as the representations, warranties and indemnities that the purchaser will be asking for from the seller as due diligence proceeds and the full legally binding transaction documents such as the Share or Asset Purchase Agreement are negotiated.