Yes, letters of intent or term sheets are commonly entered into and they can be either binding or non-binding to both parties. These record the salient terms and conditions on which the parties intend to conclude final agreements, or can be used as the sole record of agreement, in the event that such letter of intent or term sheet is binding.

• Exclusivity: This depends on the commercial agreement between the parties. However, one typically sees exclusivity granted to a buyer during a due diligence period and until conclusion of binding agreements. Exclusivity provisions can be included in the term sheet and do not need to be in a separate agreement.
• Break fee: Break fees and reverse break fees are not common in private M&A transactions. However, a break fee is usually requested as a quid pro quo for exclusivity. The quantum of the break fee is not regulated in private M&A transactions, though the Takeover Regulation Panel has stipulated that break fees in affected transactions should be limited to 1% of deal value. This can be used as a guideline in private M&A transactions.
• Confidentiality: It is typical to include provisions on confidentiality in the term sheet and, as such, these do not need to be in a separate agreement. Generally, confidentiality provisions will apply for one to two years post signature of the term sheet and will survive termination of the term sheet.

No. These are usually binding provisions in the term sheet. However, if definitive transaction agreements are concluded, they will typically contain confidentiality provisions.

Good faith is a consideration of public policy. However, it is not a legal rule (unless specifically stated in an agreement). Therefore, good faith is not a requirement under South African law. Parties are free to contract as they want, notwithstanding the fact that a contract may be unfair. Accordingly, unless the contract specifically requires the parties to act in good faith, no contractual damages may be claimed.