Document background
The Commercial Letter of Intent to Purchase is a crucial preliminary document in Indian commercial transactions, particularly used when one party intends to acquire substantial assets, property, or business interests from another. While not typically legally binding in its entirety, it serves as a formal expression of serious interest and outlines the fundamental terms of the proposed transaction. The document is governed by Indian contract law principles, particularly the Indian Contract Act, 1872, and related commercial legislation. It's commonly used in situations requiring detailed due diligence, complex negotiations, or when parties need to demonstrate commitment to financial institutions or stakeholders. The LOI helps parties align their expectations and provides a structured approach to further negotiations while maintaining certain binding obligations like confidentiality and exclusivity.
