European Liaison Office of the German Research Organisations

Preliminary Agreements

While preparing the project proposal, it may already be necessary to exchange sensitive information within the future consortium. In order to prevent the use of such information for other purposes (e.g. in cases when the is not funded) a non-disclosure agreement may be concluded, describing in detail pre-existing knowledge to be protected and referring to sanctions in case of violations. 

If it becomes necessary to come to further agreements at the stage of the proposal preparation or in the course of the grant preparation, a Letter of Intent (LoI) or a Memorandum of Understanding (MoU) can be concluded.

Both LoI, in many cases a unilateral declaration of intent, and MoU aim at defining the direction for future agreements. Mostly, these agreements include mixed forms of mere declarations of intent as well as binding obligations. A LoI signals a partner’s readiness to enter into serious contract negotiations without already providing a binding offer.

In the European context different application modes have to be considered, which may, depending on the applicable law, have different effects on the LoI. In German law, the LoI is not contractually binding but a mere declaration of intent. However, even if German law applies, the condition of concluding a comprehensive final contract should be explicitly included.

Frequently an LoI excludes any liability for pre-contractual fault in case of contract failure. In these cases the clause should be explicitly named binding. This also applies in case of non-disclosure agreements that have not been concluded as a separate agreement.