I. Transaction Contingencies. Contingencies are items that would likely cause the buyer, seller or both to walk away from the transaction should there be a disagreement. For examples: i. All Cash and Accounts receivable accrued up to the closing date will remain the property of the SELLER. ii. Buyer's Good Faith Deposit will be refunded in full in the event buyer's due diligence reveals unacceptable conditions. iii. Buyer and Seller each agree to pay their respective closing costs. iv. Buyer's Good Faith Deposit will be refunded in full in the event buyer's financing is denied and written verification is submitted to XYZ Brokerage, Inc. on or before July 1, 20XX.
Corporations and many other businesses can use this type of letter as a precursor to a formal agreement. In it they can list the salient points of their intentions and what they intend to include in formal contractual agreement if both parties can come to an amicable agreement. Thus it can be used as a fall back document should any questions arise during the final contract negotiations. A good example of this might be a letter sent to a company's investor explaining their intentions to buyout another company and what it is expected to do to the value of their stocks.