Document background
The Letter of Intent for Offtake Agreement is a crucial preliminary document used in commercial transactions where parties intend to enter into a long-term supply relationship but need to formalize their initial understanding and establish a framework for negotiations. This document, governed by Swiss law, typically precedes more detailed negotiations and due diligence processes. It outlines essential terms such as product specifications, quantity commitments, pricing mechanisms, and delivery arrangements, while also addressing the binding nature of specific provisions during the negotiation period. The LOI serves multiple purposes: it demonstrates serious intent to proceed with the transaction, provides a roadmap for negotiating the definitive agreement, and often includes binding confidentiality and exclusivity provisions to protect parties during negotiations. It's particularly relevant in sectors requiring significant investment or long-term supply commitments, where parties need to establish clear parameters before proceeding with detailed negotiations.
