The Commercial Purchase Letter of Intent (LOI) is a crucial preliminary document used in Canadian business transactions to outline the basic terms and understanding between parties before entering into a definitive purchase agreement. It serves as a roadmap for negotiating and documenting more detailed terms while providing structure to the due diligence process. While primarily non-binding, certain provisions such as confidentiality and exclusivity are typically binding. The document is particularly important in Canadian jurisdictions where it helps establish good faith negotiations and can influence the interpretation of subsequent agreements. It's commonly used in various commercial contexts, from simple asset purchases to complex business acquisitions, and must comply with both federal and provincial commercial laws.
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1. Date and Parties: Identification of the date and the parties involved in the transaction, including full legal names and addresses
2. Introduction/Purpose: Brief statement outlining the purpose of the LOI and the proposed transaction
3. Subject Matter: Clear identification of the goods/services/business assets to be purchased
4. Purchase Price: Proposed purchase price or pricing mechanism, including any adjustments or earnouts
5. Key Terms: Essential commercial terms including payment terms, delivery conditions, and key milestones
6. Due Diligence: Overview of the due diligence process, timing, and access to information
7. Timeline: Proposed schedule for negotiation, due diligence, and closing
8. Binding Provisions: Specifically identified provisions that are intended to be legally binding
9. Non-Binding Nature: Clear statement that the LOI is non-binding except for specified provisions
10. Signature Block: Space for authorized signatures and dates
1. Exclusivity: Period during which the seller agrees not to negotiate with other parties - include when exclusive negotiating rights are required
2. Confidentiality: Terms regarding the confidential treatment of information - include if not covered by a separate NDA
3. Break Fee: Details of any break fee payable if either party withdraws - include in high-value transactions
4. Financing Contingency: Conditions related to the buyer's ability to secure financing - include when purchase is subject to financing
5. Regulatory Approvals: Required governmental or regulatory approvals - include when transaction requires specific approvals
6. Employee Matters: Key terms regarding employees or management - include in business purchase scenarios
7. Governing Law and Jurisdiction: Specification of applicable law and jurisdiction - include in cross-border transactions
1. Asset Schedule: Preliminary list of assets included in the proposed purchase
2. Price Calculation: Detailed breakdown of purchase price components and calculations
3. Timeline Schedule: Detailed timeline with specific milestones and deadlines
4. Due Diligence Checklist: Preliminary list of required due diligence items and documents
5. Key Terms Sheet: Summary of principal commercial terms in spreadsheet format
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