It is common to prepare a letter of intent or term sheet in bilateral negotiations. A letter of intent or term sheet usually includes the most relevant conditions of the acquisition (i.e., price, price adjustments, the object of the transaction, due diligence, means of payment, shareholder agreement provisions, etc.). Commonly, only certain terms therein shall be binding on both parties (e.g., confidentiality, exclusivity, governing law and dispute resolution). Most terms (e.g., structure, purchase price, representations and warranties, condition precedents, indemnification) will not be binding on the parties.

A letter of intent or term sheet is uncommon in auction sales.

• Exclusivity: A term sheet commonly includes provisions on exclusivity.
• Break fee: A term sheet does not customarily include provisions on break fees but does provide for good faith negotiation and termination.
• Confidentiality: A term sheet commonly includes provisions on confidentiality.

It is not common to negotiate separate agreements for exclusivity or break fees. Confidentially provisions are commonly negotiated under a stand-alone nondisclosure agreement.

Yes. A civil action claiming pre-contract damages may be pursued by an injured party if the negotiations are terminated in breach of good faith obligations by another party, but the existence and amount of the alleged damage must be proven by the claimant.