It is customary to enter into letters of intent (term sheets, heads of terms or any document in which the preliminary understanding of parties is laid down) during or before the negotiation phase of share or asset transactions. Letters of intent are subject to the ordinary principles of Dutch contract law and are, in principle, binding. The extent to which the parties are bound strongly depends on the specific wording or content, all circumstances during the preparation, negotiation and signing of the letter of intent, the parties' intentions and their conduct. On the basis of Dutch case law, a key factor for the court in determining whether a letter of intent is legally binding is whether parties have reached an agreement on the key terms of the intended transaction. Commonly, the letter of intent or term sheet explicitly sets out that its provisions are not intended to be legally binding but merely reflect the parties' intentions, with the exception of certain provisions that are intended to be binding. Such binding provisions would typically be: (i) cost allocation provisions; (ii) confidentiality; (iii) exclusivity;; (iv) governing law;  and (v) dispute resolutions provisions.

• Exclusivity: It is customary for a term sheet to include exclusivity provisions on the basis of which the prospective buyer is given a limited period for negotiations with the seller to reach a definitive agreement for the transaction.
• Break fee: Break fees are not common provisions in term sheets for private acquisitions in the Netherlands. However, penalties can be incurred for breaches of exclusivity or confidentiality provisions.
• Confidentiality: It is customary to include provisions on confidentiality in a term sheet related to the transaction, the parties and affiliates involved, the term sheet itself, and all other documents and information that need to be exchanged between parties in light of the transaction.

Exclusivity is mostly dealt with in the letter of intent or heads of terms, but can sometimes be separately negotiated. Confidentiality provisions are very often included in separately negotiated agreements.

Special care must be given to the principles of pre-contractual good faith under Dutch law. These principles may, under certain circumstances, mean that a party may not terminate ongoing negotiations without being liable for damages to the other involved negotiating party or parties, or even (in extreme cases only) lost profits. Whether such liability will arise in a particular case will depend on all of the relevant facts and circumstances of the matter. These circumstances include the conduct of all parties involved, their reasonable expectations and their level of professionalism (including that of their advisers). As most parties wish to eliminate any uncertainties upfront, they often opt to sign a pre-acquisition agreement, such as a letter of intent, to govern the rights and obligations during the negotiations phase. Such an agreement will usually include specific provisions stipulating that there is no binding commitment on parties and that parties are entitled to terminate the negotiations at any stage until a definitive long-form agreement has been entered into.