Document background
The Commercial Purchase Letter of Intent (LOI) is a crucial preliminary document in South African commercial transactions, typically used when parties wish to formalize their initial understanding before proceeding with detailed due diligence and negotiations. It serves as a roadmap for the transaction, outlining key commercial terms while maintaining flexibility for further discussion. Under South African law, while the LOI is generally non-binding in its entirety, certain provisions such as confidentiality, exclusivity, and cost allocation may create binding obligations. The document is particularly valuable in complex transactions where parties need to demonstrate serious intent, secure exclusivity, or establish a framework for due diligence. It must be drafted with consideration of South African commercial law, including the Companies Act, Competition Act, and relevant sector-specific legislation.
