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This agreement is most often used in transactions involving a purchase. Sometimes two parties will know that they want to do a business deal together, but they aren't ready to sign an actual agreement. For example, they may agree that one party will sell his or her business for a certain price, but they do not yet agree on who will take on certain liabilities of the business. The parties can sign this document to show each other a good faith intention to work out a deal. It can also help parties get on the same page as to what they expect from the purchase.

Here are some other terms that may also be included: Confidentiality » the agreement and any information learned will remain confidential. Covenants » things each party must do while negotiations are taking place. Special Terms » any special terms that the parties agree will be in the purchase agreement, such as leaving certain items of furniture or hiring certain employees.

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