In Ontario, which document is typically used to formalize the terms and conditions of a commercial real estate purchase before the formal Agreement of Purchase and Sale?
Correct Answer
D) Letter of Intent
A Letter of Intent (LOI) is commonly used in commercial transactions to set out the key business terms, such as price, deposit, conditions and closing date, before lawyers draft the formal Agreement of Purchase and Sale. It is usually non-binding on the purchase terms, which lets the parties settle the main points before spending on a full agreement and due diligence.
Why This Is the Correct Answer
A Letter of Intent is correct because it is the document parties use to outline the main commercial terms before the formal Agreement of Purchase and Sale. It lets both sides confirm they agree on price, conditions and timing before committing to a binding contract.
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