The Role of Declarations of Intent in Business Deals and When Notarisation Matters

In the early stages of a business transaction, it’s common for parties to outline their plans in a document that sits between an informal discussion and a binding contract. This document is known as a Declaration of Business Intent. Whether you're preparing for an acquisition, forming a new partnership, or initiating an investment round, this declaration serves as an essential first step in formalising mutual understanding.

This article explores what a Declaration of Business Intent is, when it's used, the role of notarisation, and how Legitify’s online notarisation platform simplifies the process.

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What Is a Declaration of Business Intent?

A Declaration of Business Intent is a formal, written document that outlines the intentions of two or more parties to enter into a business relationship or agreement. It is often referred to as a Letter of Intent (LOI), depending on the context.

Although the document is typically non-binding, it plays a critical role in establishing the foundational terms of a future agreement. It provides clarity on what has been discussed, identifies the areas that still require negotiation, and signals that all parties are aligned and acting in good faith.

Key Elements of a Declaration of Business Intent

The structure of a declaration of intent varies depending on the deal, but it commonly includes:

• The identities of the parties involved
• The purpose and scope of the proposed agreement
• Key commercial terms (e.g., pricing, timelines, deliverables)
• Conditions to be met before a formal contract is signed
• Confidentiality and exclusivity clauses (where applicable)
• A statement clarifying which parts of the document are binding and which are not

The goal is to create a shared understanding, reduce ambiguity, and provide a framework for negotiations moving forward.

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Why Use a Declaration of Intent?

A declaration of intent serves both practical and strategic purposes during the negotiation phase. Businesses use it to:

1. Clarify Expectations Early: Outlining expectations before legal contracts are drafted helps both parties assess whether they are aligned. It can help uncover any fundamental disagreements before legal resources are committed.
2. Create a Structured Negotiation Process: Having a written summary of the points discussed allows stakeholders, legal teams, and advisors to focus on remaining areas of negotiation. It prevents duplication of efforts and serves as a reference throughout the process.
3. Demonstrate Seriousness and Commitment: Signing a declaration of intent signals a clear intent to proceed. While it may not bind either party to final terms, it demonstrates that both are engaged and willing to collaborate toward a mutual goal.
4. Provide Legal Protections for Sensitive Information: Many declarations include binding confidentiality clauses to protect sensitive commercial information exchanged during negotiations. Some also include exclusivity clauses that prevent either party from negotiating similar deals with third parties for a set period.
5. Serve as an Internal and External Communication Tool: A signed declaration can be useful when communicating with internal stakeholders, investors, or potential regulatory bodies. It shows that negotiations are underway and outlines the envisioned direction of the deal.

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Common Use Cases for Declarations of Intent

Declarations of Business Intent are versatile and apply across a wide range of industries and deal types. Common use cases include:

1. Business Acquisitions: A buyer and seller may sign a declaration of intent outlining key terms such as purchase price, due diligence timeline, and proposed deal structure. This ensures both parties agree on fundamental issues before drafting a final agreement.
2. Strategic Partnerships or Joint Ventures: When businesses plan to collaborate or share resources, they may use a Declaration of Business Intent  to define the scope of collaboration, responsibilities, and contributions before drawing up a full joint venture agreement.
3. Investment or Funding Agreements: Startups and investors often use a Declaration of Business Intent to outline the preliminary terms of an upcoming investment. This helps ensure alignment before drafting shareholder agreements or finalizing funding terms.
4. Commercial Contracts: When engaging in complex service contracts, particularly those involving staggered timelines, long-term commitments, or large sums, a declaration can summarise key terms to facilitate onboarding or early work before the final contract is complete.
5. Franchise and Licensing Deals: Franchisors or licensors may use a declaration of intent to outline territory, rights, and obligations before drafting detailed franchise agreements or license terms.

In each of these cases, the declaration helps manage expectations, protect both parties, and smooth the path toward a full agreement.

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Is a Declaration of Business Intent Legally Binding?

A common question is whether a Declaration of Business Intent is legally enforceable. The answer largely depends on how the document is worded and what the parties intend.

In most legal systems, declarations of intent are generally non-binding as a whole. They are meant to express serious intent and set the stage for further negotiation, but not to compel either party to complete the transaction.

However, certain clauses within the document can be legally binding. These may include:

• Confidentiality provisions to protect business information
• Exclusivity clauses to restrict negotiations with other parties
• Break fees or costs incurred if one party withdraws unexpectedly
• Obligations to negotiate in good faith, in some jurisdictions

To avoid ambiguity, declarations should clearly distinguish between binding and non-binding provisions. Terms like “subject to contract” or clear disclaimers can help ensure the document is interpreted as intended.

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When and Why Is Notarisation Relevant?

In most cases, a Declaration of Business Intent does not require notarisation. It is valid and effective when signed by the relevant parties. However, notarisation can add value in certain situations, especially when:

• Identity Verification Is Important: A notary public verifies the identity of each party signing the document. This adds an extra layer of trust, ensuring that all signatories are who they claim to be.
• Cross-Border or International Transactions: In international deals, one party may request notarized documents to meet regulatory or evidentiary requirements in their jurisdiction. A notarized declaration is easier to authenticate abroad, especially if an apostille or legalization is needed.
• The Document May Be Presented to a Third Party: If the declaration will be submitted to a financial institution, court, or public agency, notarisation can increase its credibility and evidentiary value.
• There Are Concerns About Fraud or Signature Disputes: A notarized document is harder to challenge. It helps deter claims that the document was signed under duress or without full consent.
• Formally Signaling Commitment: Even when not legally required, parties may choose to notarize a declaration to underscore the seriousness of their intentions. This can help build trust, especially when the parties are entering into a new relationship or working remotely.

It’s important to understand that notarizing a declaration does not change its fundamental legal character. A notarized, non-binding Declaration of Intent remains non-binding unless the wording creates specific obligations.

Notarisation enhances credibility, confirms the act of signing, and provides a stronger evidentiary foundation if the document is ever challenged. But it does not by itself turn a declaration of intent into a binding contract.

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How Legitify Enables Secure Online Notarisation

Legitify simplifies the notarisation process through a fully remote, compliant, and efficient online notarisation platform, designed to meet the needs of modern, fast-moving businesses.

• Remote accessibility: Legitify enables you to notarize documents entirely online, eliminating the need for in-person meetings or coordination across offices.
• Fast turnaround: Our platform helps you complete notarisations timely, meet tight deadlines and move deals forward without unnecessary delay.
• International recognition: Legitify facilitates notarisations that comply with applicable regulations across multiple jurisdictions, supporting cross-border transactions and multi-country operations.
• Advanced Security Measures: Legitify uses end-to-end encryption, secure digital seals, and strict identity verification to protect both your data and documents throughout the notarisation process.

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A Declaration of Business Intent is a vital tool in business negotiations. It helps parties align on key terms, clarify their objectives, and move forward with confidence. 

Whether you're preparing for a new business venture, a complex agreement, or a cross-border deal, understanding when and how to use a declaration of intent, and whether notarisation is appropriate, can add clarity, protection, and efficiency to your process.

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Looking to notarize a Declaration of Business Intent?

Legitify helps you handle it entirely online, securely, conveniently, and across borders. Learn more at www.legitify.eu.