Document background
A Contractual Letter of Intent is a crucial preliminary document used in Hong Kong business transactions to establish the framework for complex commercial arrangements. It serves as a stepping stone between initial discussions and final binding agreements, particularly in situations involving mergers and acquisitions, joint ventures, significant commercial contracts, or property transactions. The document typically combines non-binding commercial terms with binding provisions such as confidentiality and exclusivity. Under Hong Kong's common law system, these documents require careful drafting to clearly delineate binding from non-binding provisions and to ensure compliance with local contract law principles. While a Letter of Intent is not always necessary, it becomes particularly valuable in complex transactions where parties need to demonstrate serious intent, establish key commercial terms, or secure exclusivity before proceeding with detailed due diligence and negotiations.
