Document background
A Letter of Intent to Purchase Business is commonly used in Indian corporate transactions as an initial step in the business acquisition process. This document is typically drafted when a potential buyer has serious interest in acquiring a business but needs to formalize the preliminary understanding before conducting detailed due diligence and negotiating the final agreement. It outlines key terms such as purchase price, payment structure, exclusivity period, and confidentiality obligations, while clearly distinguishing between binding and non-binding provisions. Under Indian law, particularly considering the Indian Contract Act, 1872, and the Companies Act, 2013, this document serves as a roadmap for the transaction while providing certain legal protections to both parties. It's essential in complex business acquisitions where parties need to establish clear parameters for negotiation and due diligence before committing to a definitive agreement.
