Gartner Research

Never Sign a Letter of Intent or a Memorandum of Understanding Before Negotiating a Software License Agreement

Published: 21 August 2014

ID: G00264951

Analyst(s): Joseph Neapolitan, Jane B. Disbrow

Summary

Software licensors may encourage IT procurement and stakeholders to sign precontractual letters of intent promising benefits without commitment. However, these documents can prove to be legally binding agreements to purchase that reduce IT procurement's ability to negotiate a more favorable deal.

Table Of Contents
  • Key Challenges

Introduction

Analysis

  • Prevent Your Organization From Signing LOIs or MOUs, Which Generally Disadvantage the Customer
  • Update IT Procurement Processes to Ensure That LOIs Can Only Be Signed Through the Established Procurement Approval Procedure
  • If an LOI Seems Advantageous (Rarely), Obtain Legal Advice

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