Document background
A Partnership Letter of Intent is a crucial preliminary document used when parties are seriously considering forming a business partnership in Saudi Arabia but need to establish a framework for negotiations and due diligence before committing to a final agreement. This document typically precedes a comprehensive partnership agreement and is particularly important in the Saudi Arabian context, where business relationships often require careful preliminary discussions and alignment with both commercial laws and Sharia principles. The Letter of Intent outlines key proposed terms such as capital contributions, profit-sharing ratios, and business objectives while maintaining the flexibility needed for detailed negotiations. It's commonly used when parties need to secure internal approvals, conduct due diligence, or demonstrate serious intent to regulatory authorities, while protecting confidential information exchanged during negotiations. While mostly non-binding, certain provisions like confidentiality and exclusivity can be made binding, providing important protections during the negotiation phase.
