Prior to entering into any agreement involving the purchase of a Hawaii business or real estate, the parties involved may want to enter into a Hawaii letter of intent that summarizes the major points of the deal. A Hawaii letter of intent usually addresses the following major deal points:
- Purchase price;
- Amount of deposit;
- A description of the property being sold and purchased;
- The parties involved;
- The expected closing date;
- Due diligence period;
- Confidentiality; and
- Exclusive period to negotiate
The thought is that if the parties cannot agree to the above there is no sense to move forward with a more definitive agreement. Thus, the letter of intent is a mechanism to smoke out the other side.
Other points may be included in the Hawaii letter of intent, however, a letter of intent typically will not address the mechanics and other fine details of the deal. The negotiation process in drafting the definitive Hawaii purchase contract will layout the details.
Binding or Non-binding Letter: Which is Better?
A letter of intent may be binding, partially binding or non-binding. Most parties choose to enter into a “non-binding” letter of intent. A “binding” or “partially binding” letter of intent obligates all parties to follow through with the letter’s binding terms and conditions. Thus, a lot of effort and care must be spent by an attorney. As a result, if you are going to make it “binding” you might as well enter into the formal binding agreement and skip the letter of intent.
On the other hand, as for “non-binding” letters of intent, even if the letter specifically says that it is “non-binding”, there may be an implied obligation on all parties to negotiate in good faith. Also the “non-binding” language should be crystal clear that it is “non-binding” in order for you to walk away from the deal.
As you can see there are a number of issues that you will need to consider when signing a letter of intent. Letters of intent can be binding and you should be careful not to mistakenly enter into a letter of intent that is binding. You should consult with an attorney to either draft your letter of intent or review it.
Contact us today for a consultation and get the help you need to navigate this process.
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