It is customary to prepare letters of intent. They are generally nonbinding, as their main purpose is to register and summarize the status of the negotiations. Typically, letters of intent provide for the structure of the transaction and an exclusivity period. Provisions relating to confidentiality, standstill clauses, non-solicitation, exclusivity, costs and governing law and jurisdiction are usually binding provisions, while no commitment is normally assumed by the parties in relation to the finalization of the transaction.

• Exclusivity: It is common practice to include an exclusivity provision, which may vary in duration from a period of three or four weeks, to two or three months, pursuant to which the buyer may be granted the right to negotiate exclusively for a period of time with the seller, who, during the same period, will be prevented from engaging in discussions or sharing information on the target company with any third party. Exclusivity clauses are usually binding, despite the fact that the general provisions of a term sheet are usually nonbinding. In the case of a breach of exclusivity, the potential buyer can seek compensation for damages from the seller as well as from a third-party buyer if it is ascertained that the third-party buyer was aware of the exclusivity undertakings between the parties.
• Break fee: It is not common to include break fees in Italian agreements. This is mainly because Italian law already provides for a specific pre-contractual liability if negotiations are interrupted by a party not acting in good faith. In this case, the costs/damages incurred by the other party would be recoverable even in the absence of any specific contractual break fee or penalty.
• Confidentiality: It is common practice to include binding provisions on confidentiality, although it is also common to enter into separate confidentiality agreements or non-disclosure agreements to set out the terms of the relevant obligations of the parties in detail. Such agreements generally provide for the obligations of the parties involved to treat the information exchanged during the negotiations as confidential, including the existence of the negotiation itself. Specific exclusions in order to limit the confidentiality obligations may be included. The confidentiality agreements may also contain non-solicitation clauses aimed at limiting the buyer's access to the target company's employees, suppliers and customers.

Confidentiality obligations are often separately negotiated in agreements rather than provisions in letters of intent/term sheets (for further details, see the response to "Does a term sheet, in this context, customarily include provisions on exclusivity, break fee or confidentiality?" above). This is sometimes also the case for exclusivity. Regarding confidentiality, this is usually addressed by the parties before entering into any negotiation. Break fees are generally not used in Italy.

The Italian Civil Code mandates that all parties act in good faith during the negotiation and drafting of the acquisition agreements. Failing to do so will expose the defaulting party to pre-contractual liability (including making untrue statements, omitting essential information, and unjustifiably failing to complete the transaction after inducing a reasonable reliance through negotiations with the buyer that completion would have occurred).

In particular, where fraudulent misrepresentations by the seller induce the buyer to enter into an acquisition agreement, which the buyer would not have finalized had it been aware of the actual circumstances behind the transaction, the buyer may decide not to conclude the agreement. However, if the buyer would have still executed the agreement but under different terms and conditions, the same agreement is valid but the seller is liable for the damages possibly suffered by the buyer.