Non-binding Letter of Intent
This Non-binding Letter of Intent (LOI) sets out the basis for the possible purchase of a company’s shares; however it is explicitly made on a non-binding basis. It is similar to a heads of terms where the buyer and seller agree the principal terms of an agreement and wish to put their common understanding in writing.
This LOI is in the form of a letter and aims to establish the intent of the parties and clarify the key points of the deal but it is drafted so as to be completely non-binding and therefore is more of an initial proposal than in a heads of terms. There is no period of exclusivity given and confidentiality is not made binding.
Some companies may prefer the flexibility and looser language of a non-binding letter of intent, particularly for those in the early stages of discussions. It is recommended that you consider both this LOI and the Heads of Terms (Share Sales) when deciding which template may be the best starting point for your transaction.
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