Ensure that the Letter of Intent (LOI) specifies that it is in fact, non-binding, and even better, not even an agreement to negotiate in good faith. (Please consult an attorney). Courts have held that unsophisticated non-binding letters of intent can in fact bind the parties to make a good faith effort to negotiate a contract. The LOI should be in Seller's hands immediately after it is signed by Buyer (usually 1st to sign). LOI should be prepared--by either party--immediately after there is a verbal agreement as to price, terms, and other [business] conditions. Then toss the bilaterally-signed LOI immediately to an attorney to draft actual contract.
Apr 21, 2011