The expression "agreement of intent" has been heard by many. But what does it mean in practice, how to compile it, and what should be taken into account when signing such a document?
The agreement of intent is inherently close to the preliminary agreement. However, it differs from it in a number of features. First of all, the agreement of intent does not fix rigidly, but only formulates the will of the parties to sign a specific agreement in the future, to cooperate, to jointly engage in any activity.
Most often, it does not indicate a rigid time frame. We can say that the agreement of intent has, rather, a psychological force than a legal one, precisely because of the vagueness of the wording. Secondly, this document, unlike the preliminary contract, does not impose obligations on the parties. It merely indicates that in the future (usually uncertain or extended over several years), participants will consider various aspects of cooperation: from price conditions, specifications of specific goods and services, from timelines to sanctions and jurisdiction. However, the agreement of intent to conclude an agreement (for example, sale, lease, transfer of rights and others) does not describe these details themselves.
Most often, such a document is compiled in order to summarize, draw up reports on various meetings and negotiations.
It, in a more or less official form, records the good will of the parties to continue and develop relations in the future. Often, such documents are signed by various organizations and institutions - from government and diplomatic to charitable and creative. However, obligations, as well as sanctions for their violation, force majeure circumstances or specific terms are not provided. Nevertheless, the agreement of intent becomes a milestone in the relations of the parties. It can also serve as a kind of recommendation, confirming the reliability and prestige of negotiators. Terms of termination for such a document, as a rule, are not implied, that is, the parties are free at any time to abandon their intentions and plans. The impact on the counterparty and the business community is more likely psychological. Signatories of such a document who want to be considered serious partners cannot neglect their reputation and abandon plans unreasonably.
The agreement of intent for sale has
sense in the case of especially
large transactions. Often after negotiations with potential partners, after discussion of the general conditions and before their concretization, the parties have the opportunity to both analyze and study in detail the reliability of the potential counterparty, and predict the results of the transaction. At the same time, an agreement of intent in this case gives more weight and solidity to the plans. Of course, it differs from both the process and the preliminary contract, since it does not guarantee anything and does not impose obligations. Nevertheless, in business circles the signing of such a document is considered good form.