Knockdown #1 - When the letter of intent is not what it says it is
IN PRACTICE
Knockdown launches today. This newsletter covers legal strategy and negotiation for the international creative industry. No academic theory. No generic legal updates. Each issue is built around a real case, a real problem, or a real clause that matters to people who make things for a living.
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THE EDGE OF THE CLIFF: When the letter of intent is not what it says it is
"Never let the other side define the problem. Whoever frames the issue controls the outcome." - William Ury, Getting Past No.
Deals collapse for many reasons. Two of the most common are that one party doesn't know the rules of engagement, and one party doesn't act transparently.
A client was approached for a major media project with a large streaming platform. What followed was a textbook case of how not to negotiate with a creative.
The Letter of Intent presented to the client was not an LOI. It was a fully binding exploitation agreement with a misleading title. Under Dutch law, an LOI can be binding depending on its wording - and this one was. The client didn't know that. The counterparty was counting on it.
When the LOI was flagged and returned with amendments, the counterparty bypassed the lawyer entirely and contacted the client directly. This is one of the most common pressure tactics in creative industry negotiations. It is also one of the most damaging - not because it works, but because of what it signals about how the counterparty intends to operate throughout the collaboration.
The collaboration agreement that followed had the same problems. Operationally inadequate. Legally insufficient. And when the deal eventually fell apart, the stated reasons for termination contradicted documents the counterparty had sent two weeks earlier.
The real reason was never mentioned once. It was the money.
Three things this case confirms:
1. Read the document, not the title. If an LOI contains rights transfers, exclusivity clauses, or fee structures, it is not an LOI. It is a contract. Treat it accordingly.
2. Back channel contact is a tactic, not a shortcut. When a counterparty contacts your client directly after you have established a chain of command, that is not impatience. It is a deliberate attempt to create pressure outside the legal structure.
3. Pre-contradicted reasons for termination are a signal. When the stated reasons for ending a negotiation are directly contradicted by the counterparty's own documents, the stated reasons are not the real ones. Find the number that was never mentioned.
Full case analysis at knockdown.bindudeknock.com.
THE PROTOCOL
Before signing or responding to any agreement, do one thing: read the title of the document against its content. If the title says one thing, but the body contains rights transfers, exclusivity clauses, or revenue terms, you are looking at an entirely different agreement with a misleading label.
Ask your lawyer before you respond. Not after.
THREE THINGS TO TRY NEXT WEEK
1. Google your counterparty before your next negotiation.
LinkedIn, chamber of commerce registration, any public legal filings. 15 minutes. Ask your network. You will find out more than you expect.
2. Compare your negotiation notes to the final contract.
Find the gap between the intentions at the negotiation table and the execution copy. If there is gap, one of you got the better deal.
3. Name your chain of command in writing before negotiations start.
One email. One sentence: "All communications regarding these negotiations go through [name] at [contact]." Send it before the first document arrives.
Don't get knocked down, - Bindu
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