The formal Letter of Intent (LOI) is a crucial preliminary document used in German business transactions to establish the framework for future negotiations and agreements. This document type is particularly relevant when parties are considering significant transactions such as mergers, acquisitions, joint ventures, or major commercial arrangements. The formal Letter of Intent, while primarily non-binding, typically contains certain binding provisions (such as confidentiality and exclusivity) and must comply with German legal requirements, particularly the principles of good faith (Treu und Glauben) and pre-contractual obligations (culpa in contrahendo) under the German Civil Code. It serves as a roadmap for the transaction, outlining key terms, conditions, timelines, and the scope of due diligence, while providing a structured framework for progressing towards definitive agreements.

1. Letterhead and Date: Formal business letterhead of the sending party and current date

2. Recipient Details: Full name and address of the receiving party

3. Subject Line: Clear identification of the document as a Letter of Intent and brief reference to the proposed transaction

4. Introduction: Opening paragraph identifying the parties and expressing interest in the proposed transaction

5. Transaction Overview: Brief description of the proposed transaction or business relationship

6. Key Terms: Outline of the principal terms and conditions being considered for the final agreement

7. Timeline: Proposed schedule for due diligence, negotiations, and execution of definitive agreements

8. Non-Binding Nature: Clear statement that the LOI is generally non-binding, except for specific provisions

9. Binding Provisions: Identification of which provisions are legally binding (typically confidentiality, exclusivity, and governing law)

10. Signature Block: Space for authorized representatives' signatures and dates