The letter of intent (LOI) has become increasingly popular in the last several years. LOIs are generally used to confirm expectations concerning key elements of a proposed “deal” or transaction. They are used in a variety of different business transactions, including lease agreements, purchase agreements and more. And while they are not used in all transactions, they can sometimes be a very useful preliminary tool – IF drafted properly. If your LOI is not drafted to accurately reflect your intentions, you can run into some major problems. An LOI can bind you to unintended obligations or liabilities if you are not careful!
In a lot of cases, parties may want to outline certain terms of a proposed deal but do not want to create a binding contract yet. However, if an LOI is not carefully drafted, it may be considered a binding contract. For example, if there are several material or significant terms that are included and if specific language indicating that the parties do not want to be bound to the letter is not included, then you may find yourself stuck with terms that you really wanted to be able to negotiate. On the other hand, there are key terms you may want to include to protect your interests BEFORE entering into a deal. There are a number of other factors to consider when it comes to drafting an LOI.
Don’t do this alone! Make sure your Letter of Intent truly reflects YOUR intent. Contact C&G today to assist you!
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