‘Preliminary Agreements as Signposts Instead of Mini-Contracts’

Cathy Hwang, Deal Momentum, 65 UCLA Law Review (forthcoming, 2018), available at SSRN. Cathy Hwang’s article Deal Momentum offers empirical evidence to support a new view of preliminary agreements that could reshape the way we think about these hybrids between contract and non-contract. Her data – interviews with deal lawyers and a review of practitioner literature – challenge the conventional wisdom that businesspeople in large mergers and acquisitions hire counsel to draft memoranda of understanding (‘MOU’), letters of intent (‘LOI’), or term sheets to resolve either deal uncertainty or deal complexity. That view coheres with the standard statement in a LOI – often on every page – that the parties do not intend it legally bind them on substantive provisions such as price. Yet Hwang’s interviews with corporate counsel, her review of practitioner literature and case law suggest that most business people resolve uncertainties and complexities before entering a LOI, not afterwards … (more)

[Martha Ertman, JOTWELL, 21 March]

First posted 2018-03-21 13:03:10

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