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The Preliminary Sales Agreement is a crucial document used in Indian business transactions when parties have reached initial understanding on key commercial terms but require time for due diligence, regulatory approvals, or further negotiations before executing the final sale agreement. This document serves multiple purposes: it demonstrates serious intent, locks in basic terms, provides exclusivity, and creates a structured framework for moving toward the final sale. Common in both asset and business sales, it typically precedes more detailed agreements while providing legal protection during the interim period. The agreement must comply with the Indian Contract Act, 1872, and related legislation, making it especially important to include proper consideration, essential terms, and clear conditions precedent. It's particularly valuable in complex transactions where immediate execution of a final sale agreement is not practical or advisable.

1. Parties: Identification and details of the seller and buyer, including legal names, addresses, and registration details if companies

2. Background: Context of the proposed sale, brief description of the subject matter, and purpose of the preliminary agreement

3. Definitions: Key terms used throughout the agreement defined for clarity and consistency

4. Subject Matter: Detailed description of the goods/property to be sold

5. Purchase Price: Agreed price, payment terms, and any conditions related to payment

6. Timeline: Key dates including signing of final agreement, completion of due diligence, and closing

7. Due Diligence: Process, scope, and timeline for buyer's investigation of the subject matter

8. Conditions Precedent: Conditions that must be satisfied before proceeding to final sale agreement

9. Exclusivity: Period during which seller cannot negotiate with other potential buyers

10. Confidentiality: Obligations regarding confidential information exchanged during negotiations

11. Governing Law and Jurisdiction: Specification of Indian law as governing law and jurisdiction for disputes

12. Termination: Circumstances under which the preliminary agreement can be terminated

13. Notices: Process and contact details for formal communications between parties