Non-Disclosure and Other Preliminary Agreements in Business Transactions

A Confidentiality Agreement (also sometimes referred to as an Non-Disclosure Agreement) is typically the first stage for the due diligence process in a transaction. These agreements can effectively act as a standstill agreement and can take many different approaches including disclaiming reliance or being non-binding. Letters of Intent are an intermediate step between NDAs and definitive binding agreements. The Texas Supreme Court’s opinion in Energy Transfer Partners, L.P. v. Enterprise Products Partners, L.P. makes clear that Texas embraces the principles of freedom of contract among sophisticated businesses, and that they can trust that their legal documents will be enforced as written. This means that in Texas companies can rely on conditions precedent to avoid an unintended partnership or joint venture, and those conditions precedent can be set forth in a confidentiality agreement, letter of intent or other preliminary agreement. This article includes a seller oriented confidentiality agreement and letter of intent.