Letters of intent, also known as letters of interest are non-legally binding documents that outline a principle agreement. When a seller draws up a letter of intent, he may do so because he wants to outline an informal agreement to sell his business. You may wonder what the purpose of a letter of intent is if it is not legally binding. Typically, letters of intent are written to increase the likelihood that the deal will eventually materialize.
Since letters of intent are not all-encompassing, there is some provision of modifications in the final negotiation – letters of intent serve as the basis of legal agreements. While these letters may not be legally binding, they can serve as evidence in a court of law in case a deal goes awry. A buyer may want a letter of intent to sell a business from the seller so that he knows that the latter is serious about the deal.
In a situation such as this, a letter of intent will be addressed to the prospective buyer directly. A copy may be issued to lawyers on both sides as well but this is optional. To see what a letter of intent to sell a business looks like, read the following:
June 27, 2015
66 State Drive
Corinth, MS 38173
Subject: Letter of Intent to Sell Messrs. RR Donnelley to Jake Glynnhall
Dear Mr. Glynnhall:
This letter of intent sets forth the basic preliminary terms between Robert Hemingway (Seller) and Jake Glynnhall (Buyer), regarding the sale of Messrs. RR Donnelley, located at 129 New Hope Road, Corinth, MS. This letter of intent does not constitute an agreement between the parties and no agreement shall be deemed existing until execution of a definitive sale agreement.
The principle terms of the proposed transactions would be as follows:
a) Real and Effective Sale: Seller will sell the said property to the buyer within 90 days of execution of the definitive sale agreement.
b) Consideration: The aggregate consideration for the business to be sold would be $800,000.
c) Due Diligence Review: Promptly after the execution of this letter of intent, the Buyer is permitted to complete examination of the Seller’s financial records and other legal documents, subject to the terms of the confidentiality agreement (enclosed).
d) Definitive Purchase Agreement: All the terms and conditions of the proposed transaction will be detailed in the Purchase agreement which will be duly negotiated, agreed upon and executed.
e) Miscellaneous: This letter of intent shall be governed by the substantive laws of the State of Missouri without regard to conflict of law practices.
If the above terms and conditions are acceptable to you, please indicate by signing each page and on the enclosed copy of this letter of intent, along with the confidentiality agreement, and returning it to the attention of the undersigned.
Accepted and Agreed