The Letter of Intent to Do Business is a crucial preliminary document in New Zealand's business landscape, commonly used when parties wish to formally express their intention to enter into a business relationship while maintaining flexibility in negotiations. It serves as a stepping stone between initial discussions and final binding agreements, outlining key terms, conditions, and expectations. This document type is particularly valuable in complex business transactions where parties need to demonstrate commitment while still finalizing details. While governed by New Zealand law, particularly the Contract and Commercial Law Act 2017, it typically maintains a non-binding nature except for specific provisions like confidentiality. The LOI helps parties align their understanding of the proposed transaction, establish timelines, and set parameters for further negotiations, while providing a framework for due diligence and detailed agreement drafting.
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1. Letter Header: Contains date, recipient details, and sender details in proper business letter format
2. Opening Statement: Introduces the purpose of the letter and identifies the parties involved
3. Business Context: Brief background explaining the current situation and relationship between the parties
4. Statement of Intent: Clear expression of the parties' intention to enter into a business relationship
5. Proposed Transaction: High-level overview of the proposed business arrangement or transaction
6. Key Terms: Outline of the fundamental terms and conditions being considered
7. Timeline: Proposed schedule for moving forward with the business relationship
8. Non-Binding Nature: Statement clarifying which parts of the LOI are non-binding
9. Closing and Signature: Formal closing, signature blocks, and execution details
1. Confidentiality Provisions: Include when sensitive information will be shared during discussions
2. Exclusivity Period: Include when parties want to negotiate exclusively for a specified period
3. Due Diligence Process: Include when preliminary agreement for due diligence investigation is needed
4. Binding Provisions: Include specific provisions that are intended to be legally binding, such as confidentiality or exclusivity
5. Cost Allocation: Include when there's a need to specify how costs during the negotiation period will be handled
6. Break Fee: Include when parties want to specify compensation if one party withdraws from negotiations
7. Governing Law Statement: Include when transactions involve multiple jurisdictions or when specific jurisdiction needs to be clarified
1. Term Sheet: High-level summary of key business terms being considered
2. Timeline Schedule: Detailed timeline of proposed steps and milestones
3. Contact Details: List of key contacts from each party involved in the negotiations
4. Preliminary Due Diligence Requirements: Initial list of documents and information required for due diligence
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