Should the parties in a purchase or sale of a business have a letter of intent (LOI)?

New Jersey business transactions attorney, Harold I. Steinbach, explains why simple letters of intent are good practice, but not to make them binding.

Contact Harold I. Steinbach

Email: [email protected]

Phone: (201) 525-1990

Transcript:

It’s a great question, to have or not to have I wish Hamlet would have asked that. There are two schools of thought; some people think it’s a great idea ’cause you at least know you have a deal. Some people feel why spend all that time negotiating it, it’s just yet another document and more cost. My philosophy is I like a simple one. You should be able to fit it on one to two pages of paper on the big issues. And I feel like if you can’t even agree to that, let’s just blow it up early and not put in all the time and money.