When a large multinational corporation begins to consider a merger or acquisition, it might initiate a series of negotiations before a deal is completed. The Letter of Agreement is a way to ensure that both parties have the same mindset concerning the general outline of the relationship. If the relationship goes awry, one party may need to cancel this agreement. Here are the steps in Canceling a Letter of Agreement.
How does a Letter of Agreement Differ from a Contract?
An agreement is the mutual acceptance of the general “guidelines” or “terms” of a relationship that may or may not be legally binding. A contract is an agreement that is legally enforceable. The Letter of Agreement is a sharing of ideas as two parties contemplate a common action. This might be an unofficial precursor to an official contract.
Many corporations send out “feelers” before taking over a firm. They want to know if the other party feels, thinks and views their business the same way. A Letter of Agreement can include name of parties, definitions, financial prices and relationships between the parties. Some contracts can become very long when they must include all of the “background” information. A Letter of Agreement can help make the contract more compact.
How to Cancel the Letter of Agreement
Canceling a Letter of Agreement requires that you include 1) your cancellation action, 2) the Letter of Agreement identifying criteria and 3) the date of your cancellation. If you have an identification number or title for the agreement, this can help. Your cancellation statement must be clear, concise and to the point.
You must also discuss the parties involved, the beginning\ending date of the original agreement and financial considerations. If you still owe money to the other party, you should include final payment with the cancellation letter. Otherwise, you must explain how you will pay any outstanding financial balance.
You could discuss why you are cancelling the agreement and if future cooperation would be acceptable. “Don’t burn your bridges.” Also, provide good contact information, like a phone number, email or physical address. Request confirmation of reception of the cancellation letter. Sign and date the bottom.