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The Commercial Letter of Intent (LOI) is a crucial pre-contractual document used in Australian business transactions to establish preliminary understanding between parties before entering into a formal agreement. It is particularly valuable in complex commercial transactions where parties need to document their initial understanding while maintaining flexibility for negotiations. The LOI typically combines non-binding commercial terms with specific binding provisions (such as confidentiality and exclusivity), reflecting Australian legal principles and business practices. This document is commonly used in mergers and acquisitions, joint ventures, major supply arrangements, and significant commercial partnerships, providing a structured approach to negotiations while protecting both parties' interests. Under Australian law, careful attention must be paid to clearly distinguishing between binding and non-binding provisions to avoid unintended legal obligations.

1. Date and Parties: Full legal names and addresses of all parties involved

2. Introduction/Salutation: Formal business letter opening

3. Background/Purpose: Brief context of the proposed transaction or relationship

4. Key Terms: Main commercial terms and basic understanding between parties

5. Proposed Timeline: Expected dates for key milestones, including due diligence and formal agreement execution

6. Non-Binding Nature: Clear statement about which provisions are non-binding, typically including the main commercial terms

7. Binding Provisions: Explicitly state which provisions are binding (typically confidentiality, exclusivity, and governing law)

8. Duration/Expiry: Period for which the LOI remains valid

9. Signature Block: Space for authorized representatives to execute the document