Document background
The Letter of Intent Memorandum of Understanding is a crucial preliminary document in U.S. business transactions, serving as a bridge between initial discussions and final binding agreements. It is commonly used when parties have reached a general understanding about a potential transaction but need to formalize their intentions before proceeding with detailed due diligence and negotiating definitive agreements. The document typically combines both non-binding elements (such as proposed business terms) and binding elements (such as confidentiality and exclusivity provisions). Under U.S. law, careful drafting is essential to maintain the intended non-binding nature of certain provisions while ensuring enforceability of others. This document type is particularly valuable in complex transactions where parties need to demonstrate commitment, secure financing, or obtain board approvals before proceeding with full documentation.
