business proposal letter free samples

The key to a letter of intent in force

A letter of intent or LOI is a document that describes the agreement agreement between two or more parties before the agreement is finalized. A letter of intent is like a written contract, but are generally not binding on the parties. The purpose of a letter of intent may be to clarify the key points of a complex operation for the convenience of the parties to formally declare that the parties are negotiating, as in a merger or joint venture proposal or provide guarantees in case agreement collapses during negotiation

Non-binding letters of intent for the purchase of a business or business assets should be drafted carefully and may include most or all of the following:

The total compensation, including ventilation (the size of the deposit, payment, debt financed by the seller, bank debt)

Guarantees clear and marketable title

A detailed list of all the liabilities and assets to be purchased

Assurances of the validity and Supported by contracts (if applicable)

Tax liability limitations

On the operating condition of all equipment and machinery at the time of purchase

Provisions enabling the buyer to pay the purchase price if: 1) undisclosed liabilities come due after settlement, and 2) actual inventory purchased does not match amount specified in sale agreement

The provisions that the company spends all necessary inspections

Provisions that final sale is subject to the audit of financial statements, license and transfer lease

Provisions that final sale is conditional on obtaining financing for the purchase

Restrictions on operations until the final settlement

Non-compete clauses and counseling (which are sometimes organized in a separate document)

Allocation of purchase price

Settlement date (can also include "Drop Dead" date on which both parties agree to stop negotiations) Business Experts say, however, that most letters of intent are primarily concerned with the delineation of the main terms transaction. Indeed, a small business owner who ends up negotiating numerous minor details in a letter of intent and can skip step entirely and proceed directly to a purchase and sale agreement.

key terms that should be included in a letter of intent, however, include the total fee, including payment and payments, a description of goods or equipment for sale, distribution tax price of fixed assets, goodwill, covenants not to compete, and consulting fees, and target dates for the contract and closing. Of all these elements, price and payment terms are by far the most important elements of the letter.

About the Author

Mark Warner is a Legal Research Analyst for RealDealDocs.com. RealDealDocs gives you insider access to millions of legal documents drafted by the top law firms in the US. Search over 10 million Documents, Clauses, and Legal Agreements for Free at http://www.RealDealDocs.com

Free Business Letter Writing Tips