I have been asked if the language “letter of intent” is no longer the term of art it once was in the commercial environment and if that term is causing concerns and binding parties prior to their intent. I do no think it matters too much what you call the interim communications, be it “letter of intent” or “memorandum of terms.” The key is to note that the the memo, is not binding and to declare in writing that there is not to be an agreement, until such time that the agreement is mutually executed.

EXAMPLE
_________________________________________

This letter is a Non Binding Memorandum of Terms. It is intended solely to be a guide to the preparation of a mutually satisfactory Agreement (“Agreement”) between the Parties for the location described below. No legal obligation is intended to exist until a definitive Agreement is executed and delivered. Nothing herein shall be construed to preclude other provisions consistent with the contemplated transaction from being inserted in said Agreement at the request of any party hereto.

Advertisements