Letters of Intent in Spain

Commit to your new venture with your rights’ protected

 

Our corporate lawyers will guide you through the process step-by-step.

How can a lawyer help me?

A Letter of Intent is usually a statement of the transactions’ principal terms. By engaging a lawyer at this stage your transaction will have a solid foundation and will be positioned for success. Working with a legal expert will save you time, money and stress in the later stage of the transaction.


At Lexidy LegalTech Boutique, our lawyers will guide you through the preparation of the Letter of Intent. They will also provide all the necessary legal support at each of the stages of the transaction.

¨We will be with you each step of the journey.¨

 

What is a Letter of Intent?

A Letter of Intent is the start of an exciting chapter in your business or venture. Essentially, it’s a document that declares the initial commitment of one party to do business with another but in a reality, it’s the execution of business strategy and its success. This document can also be as a Term Sheet or Memorandum of Understanding.

How is the document structured?

The Letter of Intent usually covers the following:

  • The subject matter of the transaction.
  • The price.
  • Financing details.
  • Whether the offer is binding or not.
  • Internal and third-party approvals, if applicable.
  • Due Diligence terms.
  • Future plans for the target company.

Typically, the buy-side will always aim for the Letter of Intent to not be legally binding but exclusive, This helps gives them more flexibility to withdraw from the transaction but prevents the seller from seeking other parties who may be interested.

Conversely, the Sell-side will want the letter to be binding from the outset as they will have to release sensitive information about the business during the legal Due Diligence process.

Why do I need a Letter of Intent?

When a company is embarking on an international transaction, it’s highly recommended that both parties agree to do business and that the agreement is legally binding and documented. It’s important to do this step before signing a sales and purchase agreement because a Letter of Intent allows for thorough Due Diligence. An experienced lawyer will use the Due Diligence process to explore and uncover any potential issues with the transaction and ensure that the client’s best interests are protected.

What is the process of creating a Letters of Intent?

A Letter of Intent is usually a statement of the transactions’ principal terms. By engaging a lawyer at this stage your transaction will have a solid foundation and will be positioned for success. Working with a legal expert will save you time, money and stress in the later stage of the transaction.


At Lexidy LegalTech Boutique, our lawyers will guide you through the preparation of the Letter of Intent. They will also provide all the necessary legal support at each of the stages of the transaction.

Frequently Asked Questions

Letters of Intent are not contracts and that is why we always advise signing a legally enforceable agreement beforehand. 

Although a Letter of Intent is not binding, most of the time there might be specific terms within the document that is legally enforceable, such as:

  • Non-solicitation: Prevents both parties from poaching each other’s employees.
  • Confidentiality: Ensures that there are legally enforceable obligations towards privacy.
  • Exclusivity: Stops both parties from negotiating with other entities for a reasonable period and provides both parties with an incentive to complete their negotiations.

One of the advantages of signing a Letter of Intent before a Notary Public is that there is no need to prove that the document exists. Also, it shows that both parties freely agreed to be bound by its terms.

This is important because while a Letter of Intent isn’t legally binding, there may be penalty clauses in the document that need to be enforced. These can include penalties for withdrawing from the transaction without just cause.

As the Letter of Intent is not expressly regulated under Spanish law, there may be liabilities depending on the clauses inserted in the document. For example:

  • Non-contractual liability – This occurs if one of the parties simply decides to break off negotiations without just cause for the end of the agreed exclusivity period.
  • Contractual liability – This type of liability arises if parties to a confidential period and one of them breaches it.

Our Story

We are a department formed by qualified legal experts who have been trained in the field of corporate law. We work on these requests every day and it’s our passion. For us, Lexidy is a way of life and what excites us the most is to be able to deliver the happiness and satisfaction of a successful process. We want to help you achieve your goals and dreams.

Héctor Lopez Vazquez

Head of Corporate Department

Madeleine Cadwell

Paralegal

Marta Ametller

Paralegal

Samuel Ortega Vega

Lawyer

Client’s stories

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