Are there really a lot of ways to skin a cat? Ruminations can’t think of many (or even any, mostly because it doesn’t make for a good picture). Basically, we don’t know. How many ways are there to go from a napkin’s worth of deal notes (a/k/a a letter of intent) to the first draft of an agreement? Will today’s posting have a lot more questions than answers? Who’s asking? Yes, it will.
We think there are three categories of agreements to be considered, each with a different starting point. One is the form agreement, whether designed to be so or by use of an existing one (from a prior deal); another is “from scratch,” and the third being the “hybrid” agreement, one that is partly an existing “form” and partly a blank screen (or piece of paper). Cleverly, our three categories are fully inclusive.
We’ll start our Ruminating with the “adapt the form” approach. Do you take the letter of intent in hand and, point by point, then look for the matching lease provision to change or fill-in? Do you start at the top of the form and read down until you reach a provision that intersects with the letter of intent? Whichever approach you take (and even if you claim to do a little of each and then some), how confident are you that you’ve adapted the form to the deal? What we are asking is how sure are you that you’ve “adjusted” every place in the form that is affected, even tangentially, by any non-standard part of the deal? How well do you “know” the form before you start? [Read more…]