Deal Letter



A deal letter spells out the terms of a business deal in a clear and understandable way.

Uses

  • Entering into a business deal with another business or individuals outside of your company.
  • Working through complex business transactions, such as major stock purchases or mergers and acquisitions.

Overview

Complex business transactions often require multiple contracts, resolutions, and a myriad of other legal instruments in order to be finalized. At the end of the day, it can be surprisingly easy for the main intention of the deal to be lost among the details. Use this deal letter to clarify the terms of a potential business deal without exposing yourself to legal or financial liability.

A deal letter specifies in a clear and concise manner what the terms of a business deal are. A deal letter can be helpful in determining the mutually understood intentions of all parties to a complex transaction. However, a deal letter is not a legally binding contract, so parties are free to walk away. If the transaction moves forward, and the final contract can be drafted based on the deal letter, or the parties can negotiate entirely new terms. Also, if any binding contracts are broken and everyone ends up in court, a deal letter can be very helpful in figuring out the parties’ original intentions and who is at fault for failing to fulfill them.

Deal letters should be short, but they must include basic information about the businesses and individuals involved in a complex transaction. To make sure everyone who is a party to your business deals is on the same page, use this interactive application to develop a clear and effective deal letter. Clarifying the terms of a pending deal can help make sure everyone is on the same page as the work through the terms of a complex transaction.

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