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Lawyer's Insights on "Letter of Intent" in Corporate Law

Frequently, lawyers are confronted with the question: Does the LOI legally bind the parties?

A lawyer specializing in corporate law can explain that a "Letter of Intent" (LOI) is a written statement from one or both parties (often companies) about their intended legal transaction. This can be shared before initiating business discussions or during negotiations, even before the formal contract is established.

The Letter of Intent can be legally binding if it outlines essential elements of the transaction. For instance, in the case of parties aiming to conclude a sales agreement, if they agree on the subject and purchase price, the LOI becomes legally binding. Parties commonly establish key points of complex agreements or affirm their intent to reach a contract even if all details are not finalized.

However, it's important to note that the LOI isn't explicitly regulated by the Slovenian Obligations Code (OZ). In practice, it can represent an offer, preliminary agreement, or even a contract if it expresses the parties' mutual consent on essential elements.

A preliminary agreement commits the parties to later form a main contract. It binds if it includes essential components of the main contract (Article 33, paragraphs 1 and 3, OZ).

An offer is a proposal to conclude a contract containing all essential elements. If minor points remain unresolved after agreeing on the main terms, the contract is deemed formed. Any remaining minor points are resolved by the court, considering prior negotiations, established practices, and customs (Article 22, paragraphs 1 and 2, OZ).

 

Consulting a Lawyer: The Wise Move for Your Letter of Intent

This section emphasizes the importance of seeking legal counsel when dealing with LOIs. Discuss scenarios where consulting a lawyer is highly recommended and how they can provide valuable guidance in navigating the legal aspects of LOIs.

 

Typical expressions often found in an LOI include:

 

"I, the undersigned, declare my willingness to conclude a sales contract with the opposite party..."

 

"The undersigned parties express their readiness to initiate all necessary steps for the conclusion of a management contract..."

 

 

Note: This publication offers a simplified overview of a specific legal topic in the field of corporate law, tailored for readers without in-depth legal knowledge. The posts do not cover all details of individual legal issues; for specific legal queries, consult a legal expert.

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