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Letters of Intent Can Carry Unintended Consequences

August 2017

In an article published by WardsAuto, Scott Augustine and Erica Opitz discuss letters of intent and how they can carry unintended consequences for dealers if caution is not used. “Dealers shouldn’t regard a letter of intent as a tentative, no-obligation statement of plans to buy or sell a business,” Augustine and Opitz explain. “A ‘nonbinding’ letter of intent may carry implied or explicit binding provisions that limit future negotiations of terms or could carry consequences for backing out.” The article discusses key provisions in a letter of intent to be cautious about and explains that there is no such thing as a completely “nonbinding” agreement. Essentially, a letter of intent is a contract and dealers should enter into it with caution. You may read the full article here.