I write this article today as a word of caution for readers, clients of Morgan & Westfield, and other professionals who may have read the popular article titled " What Is A Definitive Purchase Agreement ”.
Even a document labeled “Letter of Intent” may be enforced by a court of law as a binding, enforceable agreement if the court determines that the parties intended the document in question to be a binding agreement at the time it is signed.
Regardless of what the parties might subjectively believe-- and just about every business person the author has ever consulted with, would subjectively believe that a “Letter of Intent” is nothing more than a preliminary, non-binding agreement that is intended to facilitate preliminary due diligence ̶ a court of law’s determination as to whether a document labeled “Letter of Intent” might in fact be a binding purchase agreement, will not turn upon the parties’ professed subjective intentions. Rather, a court of law will look to the language contained within the document, itself, to determine what the intentions of the parties may have been, at the time they signed the document in question.Are You Kidding Me?
No. And believe me, when a business owner is threatened with the potential loss of a company as a result of an adverse court ruling, he/she does not view the matter as a joke.
First and foremost, business owners thinking about selling a business, and prospective purchasers interested in purchasing a business, must