A declaration of intent or conditions will include the preconditions for signing the agreement. These may include the presentation of some key documents and the approval of an external body (for example. B export control or safety certification). If the parties are companies, check the by-law and all shareholder agreements to determine if you need shareholder agreement. If the parties are partnerships, you may need to get the partnership agreement – see the partnership agreement. One of the most common conditions is the satisfactory implementation of due diligence by one or both parties. This is an investigation by the other party to address all the significant risks associated with the proposed transaction, which can then be addressed in the agreement. In a way, a Memorandum of Understanding is an announcement of negotiations. Therefore, you can also use a Memorandum of Understanding as a draft before the final agreement is negotiated. In the event that you are negotiating a major agreement, there may be many small aspects to consider. In this case, the Memorandum of Understanding serves as the basis for examining the subsidiary aspects during the negotiation. During the negotiations, a declaration of intent would provide you with security that would allow you and your colleague to test each other and reach a final agreement, since you both signed that you are interested in the transaction.
This letter confirms our understanding of the present reciprocal intentions to [insert the buyer`s name] (the buyer), [insert the seller`s name] (the “company”) and [insert the name of the shareholder] (the “primary shareholder”) with respect to the main conditions under which the buyer will acquire the entire capital of the company. Such a transaction is referred to as “acquisition.” The buyer, the company and the principal shareholder may be collectively referred to as “parties” or individually “party.” It is important that you sign a legally applicable agreement before you start doing things under it. Here you will receive a free service contract template. Define the specifics of a service offered or received. In principle, a Memorandum of Understanding can be used for all types of agreements, but some are more common than others. The declaration of intent is the most common before a cooperation agreement, a sale and sale contract or the transfer of shares to a company whose intention is to perform due diligence first. A declaration of intent or letters of intent generally cover the following issues: the details of the proposed agreement and the deadline for signing; Key commitments made by the parties as part of the proposed agreement; which will present the first draft agreement.