What is the letter of intent

Currently, the law regulates various spheres of human activity, even those that would develop in the future. For example, to normalize relations and the creation of safeguards for making a future transaction you can enter into a preliminary agreement or letter of intent.

The concept of a contract of intent

A preliminary agreement or letter of intent bears the name. Like other types of contracts it would give rise to legal obligations from entering into its sides. However, it is not the transfer of property, performance of works or provision of services, and the conclusion of another contract. Thus, the parties undertake to conclude in the future a certain loan agreement, deliveries and so on, fastening your obligation in the preliminary agreement. Prepared such an agreement usually in written form. Concluded it will be considered only if the notarial certificate or the state registration.

The content of the contract

The document provides specific content. In the contract must be given its essential terms. For example, the supply contract must be accompanied by a description of the goods (name, quantity, quality, assortment and delivery time, the purchase and sale of real estate - description of real estate and its price, construction works, their nature and outcome. Thus, a preliminary contract must show the terms on which they will base their relationship of the parties in the future. Also stipulates the imprisonment term of the basic contract, which is usually up to one year.

Sometimes a situation arises when one of the parties refuses to conclude a contract subsequently on the basis of the agreement of intent. In this case, the other party has the right to demand this in court by filing a claim about compulsion to conclude the contract. Also in the preliminary contract can be specified the amount of liquidated damages (fine, penalty) for the delay or refusal to sign the final document.

Most often a preliminary agreement is in the capital construction, lease, contract, transport, purchase and sale of real estate and other situations where you need to plan carefully the terms of interaction. The parties should comprehend the contract terms and the consequences that arise after the signing. That is why the creation of the document is usually preceded by negotiations of the parties with answers to the various questions provided by the conditions. Anyway, preliminary agreements help make informed decisions in the future.

It is worth remembering that the transfer of the Deposit prior agreement to control the performance of obligations impossible. The document also provides for the conclusion of agreements on compensation, since, according to arbitration practice, this agreement may not be grounds for termination in the future obligations of the parties.