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Contract Drafting_Seminar 1
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Introduction to Contract DraftingPreliminarily agreement:
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- Letter of intent, commitment letter, term sheet or memorandum of understanding, all of those
terms are called preliminary agreements.
- Document an incomplete set of terms that the parties have agreed upon while anticipating
further negotiation of the remaining provision. So, we both agreed on some terms, let’s make
them on paper to prove that we have agreed on those terms in later on.
What you need to watch out for in regard to letter of intent/MOU:
- Letter of intent, as Letter of Intent in legal writing, but only when referring to a specific
document under discussion) is a document outlining the understanding between two or more
parties which understanding they intend to formalize in a legally binding agreement.
- The LOI is a tool to for the parties to set terms on which they have agreed and willing to use
them in the definitive agreement.
- The LOI should be quick and followed by a comprehensive agreement that the parties can
sign.
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- It has to be clear and specific if the LIO meant to be binding or non-binding or combination
of both such as some terms you want them to be binding and some are non-binding. And on
basis of that LIO the court will see what was meant to be binding and what not.
- Should be done with help of a legal counsel, and the parties should have a clear
understanding about the terms and what will happen when the LIO terms expire, does the
party walk away without any responsibilities? Or there must be further steps taken
afterwards?
- So do not get over-enthusiastic and add somethings that you are not wiling to do in the
definite agreement and put what you really planning to do and nothing more, so being careful
with it is a necessary issue.
- The bindingness is depends on what the terms say, you can add in the specific clause that
intention to be bounded, and for some not, and also you will have to explain what kind of
liability for each of the parties in case of termination or non-compliance with some specific
term. Additionally, in case of dispute of after that then it will be ended up to the court and
under the governing law and by the court will decide on that matter instead.
- What happens if there is no specific mention of bindingness within the LOI/MoU? Is there a
standard, or is that dependent on the jurisdiction, or? (the lawyer is has done a very bad job
then because it is your job to make it a clear as possible) the court will look to the wording
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