This lesson looks at the process of negotiations discussing the terms of a contract when the parties contemplate a final written agreement. Often the intention is to put the terms into a final definitive writing and for the contract not to arise until signed. Other times, parties may actually agree to the terms of a contract with the obligation to execute a final contract in writing containing all the terms agreed upon. When they make such an agreement, this agreement itself may conclude the contract even prior to the signing of the final documents. This lesson illustrates both of these situations and concludes with a sample analysis problem looking at the existence of a contract after oral negotiations.
On completion of the lesson, the student will be able to:
1. Distinguish between a situation where the parties intend that a signed written agreement will merely memorialize a valid oral agreement and a situation where the parties intend not to be bound until they have signed a written agreement.
2. Evaluate the applicable factors to determine the intention of the parties in the situations described in Outcome 1.
3. Define "letter of intent."