The agreement of intent is one of the forms of protection by the parties of their interests in the preparation of the transaction. If for some objective reasons it is not possible to immediately execute a transaction, but there is no desire to refuse it, then such a document serves as a kind of insurance.
Difference with prior agreement
A preliminary contract and a letter of intent are slightly different things. In the first case, there is an agreement on the terms of the future agreement, which the parties plan to conclude. The conclusion of an agreement in the future is imperative. An exception is a party’s refusal from it and the expiration of the period during which the obligation to enter into an agreement is valid.
Refusal or avoidance of execution gives the right to the second party to file a lawsuit in court on coercion to conclude the main transaction. The contract of intent is characterized by the fact that it is not obligatory. Its purpose is to fix the will of the participants. And in court, if a dispute arises, it serves as a source of information about the goals that the parties originally set.
Are the protocol and letters legal
The Civil Code mentions a protocol on disagreements that arose during negotiations on a future deal. No reference is made to the protocol or letter of intent in the law.
Letters may matter from the point of view of the law, if the contract is actually executed, but there is no familiar document in which all its conditions would be fixed.
The real significance of the correspondence and the protocol of intent is determined by the court based on the circumstances of the particular case, on what consequences they had.
How to make it in the best way
It is noted above that the agreement of intent is of relative importance. And the participants in the negotiation process may be careless in its preparation, as well as in correspondence during negotiations.
The only way to use it for your own benefit is to state the conditions of a planned or proposed transaction as clearly and fully as possible. Do not treat it like a paper for reporting.
Those who wish to make it binding must expressly designate it as a preliminary contract.
When planning to conduct the main transaction through a notary public, its participants also certify the preliminary contract with him, otherwise it does not have legal force.
The draft of the future transaction on the example of a lease
For example, an agreement of intent is being prepared to conclude a lease. The agreement of intent must include the word “lease” in the name of the contract. Information about the object is also an integral part, first of all, it concerns the cadastral number.
The purpose of the premises is also noted: it is transferred for living or storing goods and raw materials.
Such careful treatment of the subject matter of the agreement is justified. It refers by law to the essential conditions, without the agreement of which the transaction is considered not concluded. In the case of a lease, such a clause is the subject or object of the agreement. However, essential conditions cannot be dispensed with.
What is another feature of the lease? In intentions, several objects can be offered to choose from or one of the available ones, depending on the circumstances that will develop after.
The terms of the duration of the future transaction or the conditions under which it terminates without regard to the terms are specified.
If a preliminary contract is concluded, the main transaction shall be concluded no later than 12 months later, unless otherwise provided by the parties. Entrepreneurs usually do not go beyond a one-year period.
Delivery Relations
Now we will analyze the points.In the preamble, information about the parties is indicated (full name and registration number of the individual entrepreneur or the name and registration number of the organization).
In the samples of the contract of intent, the subject is preparation for the conclusion of a supply agreement.
The agreement states the obligation to agree on the schedules, scope and nomenclature of the goods supplied.
The total amount of the transaction, its minimum limit may be specified, calculation options are offered:
- part of the amount is transferred in advance to the account by bank transfer before each delivery;
- the remaining amount is transferred upon completion of the contract.
An agreement of intent may imply a refusal to enter into similar transactions with other persons within an agreed period of time.
Termination of the agreement of intent is made by notifying the other party unilaterally. A different procedure may be provided, otherwise all obligations imposed by the agreement lose their meaning. However, everything is determined by the degree of seriousness and significance of the agreement for the parties.
Finally
The contract of intent is a declaration of the parties about their plans. Unlike the preliminary contract, it is not considered legally binding and is not even considered by law as something significant.
In judicial practice, it is used as a means to find out the will of the parties, their agreements, preceding the transaction.