The documents in a private car deal

Two obligations in one document. The non-disclosure half stops either side passing on confidential information: who the owner is, what the car is, what was asked for it. The non-circumvention half stops you taking an introduction and then dealing directly with the other end of it, cutting out whoever made it.

It is standard in any trade where the introduction is the thing of value, and it is the reason owners allow anyone to bring a buyer at all. Without it there is nothing to stop a prospective buyer being handed a name and simply using it.

The two halves usually have different lifespans, and it is worth checking that yours do. Confidentiality often survives indefinitely, which is normal: information does not stop being confidential. Non-circumvention should run for a stated term, commonly somewhere between one and five years depending on how significant the introduction is, and should be measured from a defined point such as the date of introduction.

A reasonable NCNDA is specific and finite. Be careful with one that restricts you indefinitely, covers cars or sellers you were never actually introduced to, or defines circumvention so broadly that any future purchase of that model could be caught. Restrictions of that kind are also the ones most likely to fail if anyone tries to enforce them, since a court asked to uphold an unlimited restriction on who you may deal with tends to decline. How far that goes depends entirely on the governing law, so an NCNDA that does not state one has left its own enforceability undecided.

Many of these templates circulate with International Chamber of Commerce references attached. Treat that as decoration. It does not make a document authoritative and the citations are frequently invented.

The LOI sets out the requirement: model, quantity, specification tolerances, maximum mileage, preferred location, budget, and whether that budget includes commissions. It is the document that lets a serious approach be made to an owner, because it converts an enquiry into something specific enough to act on.

On the purchase itself an LOI is normally non-binding. You are stating an intention, not signing a contract to buy. Confidentiality and non-circumvention clauses inside it may well be binding, which is the part people skim.

What the document is called decides nothing. A court looks at what the parties intended and at how the wording reads, so a letter headed “letter of intent” that sets out every material term in definite language and contemplates no later contract can be held binding anyway. Marking it subject to contract helps, but the safer course is a line stating plainly which clauses bind and which do not. If the letter is silent on that, ask for one.

All of which is the common law position, and on a cross-border purchase it is not safe to assume it travels. Several civil law systems attach duties to the negotiation itself, separately from any contract. German law is the firm example: pre-contractual obligations are recognised in the Civil Code, and a party who enters a letter of intent with no genuine intention of honouring it, or who abandons advanced negotiations without a justifiable reason, can be liable in damages. French law reaches a narrower version of the same place through tort, requiring negotiations to be well advanced and broken off arbitrarily, and limits recovery to what the other side wasted in reliance.

The practical consequence is simple enough. Non-binding does not universally mean consequence-free, so find out which law governs the letter before you sign it rather than after you change your mind.

An LOI is not an offer on a particular car. It comes before any specific vehicle is on the table, which is the whole point: it is what makes information flow in your direction rather than yours flowing out.

What should make you stop is an LOI that commits you to a price before you have seen a car, a VIN, or any evidence it exists.

Where a buyer prefers not to be named at the outset, or simply works through an adviser, the representative acts on a mandate. A usable one does three things: it names the buyer or confirms a named buyer exists, it states what the representative may and may not do, and it confirms that any purchase remains subject to the buyer's own approval.

The limits are the important part. A mandate that permits someone to receive information is a different document from one that permits them to commit funds, and the second is rare. If a representative claims authority to agree a price, the mandate should say so in writing.

This is also the distinction that separates a representative from a broker chain. One mandated representative between an owner and a real buyer is normal. What is not normal is a sequence of people, none of whom hold a mandate from anybody, passing a car along and hoping a buyer appears at the end of it.

Owners of cars at this level are not short of attention, and almost all of it is unqualified. Proof of funds is how a seller decides whether to open their garage. It usually takes the form of a recent bank statement, a bank comfort letter, a letter from a bank officer, or confirmation from a solicitor or escrow agent holding the funds.

Three things are true of a legitimate proof of funds request. It comes from the seller's side as a condition of proceeding, not from an intermediary as a condition of talking to you. It can be redacted: a balance and a bank's confirmation are enough, and nobody needs your full account number. And it is never a transfer. Proof of funds moves no money.

On the rarest cars a seller may want it alongside the letter of intent rather than after. That is reasonable where the population is in single figures and the owner is being asked to confirm they would sell at all.

Anyone who asks you to move money, place a deposit, or obtain a blocked funds instrument in order to prove you have money is not qualifying you. Treat it as the end of the conversation.

You may be shown one, or asked to acknowledge that one exists, so it is worth knowing what it is. A fee protection agreement, often called an irrevocable master fee protection agreement, sits between the people arranging a transaction and sets out how their remuneration is meant to be protected when it completes.

Meant to be, rather than is. The word irrevocable in the title is a claim, not a legal effect, and how much force one of these actually carries depends on the governing law, on whether there is a workable dispute clause, and on whether it is tied to a real sale agreement rather than floating free of one. Plenty are not.

None of which is your problem. It is not a document you are a party to, and it does not create an obligation on you beyond the price you agreed. What it should prompt is one question, which is the only question about commission a buyer actually needs to ask: is the number you have quoted me inclusive of all commissions, or will fees be added to it?

Get that answer in writing, in the letter of intent, before anything else happens. Almost every unpleasant surprise in this trade traces back to a buyer and a seller who each thought the other side was paying the intermediaries.

Everything above is preparatory. The sale agreement is the transaction. It names the buyer and the seller, identifies the car by VIN, states the price and currency, and sets out delivery and transport terms and who carries the risk in transit.

The clauses that matter most are the ones about title. The seller should warrant that they own the car outright, that it is free of finance, liens and other encumbrances, and that it is not subject to a resale or transfer restriction imposed by the manufacturer. That last one catches people on recent limited-production cars, where the original allocation contract can restrict resale for a period after delivery.

Supporting documents should arrive with it rather than after: registration, service history, any factory certification such as Ferrari Classiche, and an export or customs file where the car is crossing a border.

On a private sale between parties who have never met, escrow is what makes simultaneous exchange possible. Funds go to the escrow holder, the car and its documents are verified, and the money releases on the conditions written into the instruction.

Who holds it is the entire safeguard, and the test does not change from country to country even though the names and the supervisors do. Three questions. Is the holder supervised by somebody, for the specific business of holding other people's money. Can you verify that yourself on a public register rather than from a logo on a letterhead. And are the release conditions written down before the money moves.

Three mechanisms satisfy that in practice. A dedicated escrow or payment provider, where what it holds is usually authorisation for the payment side of its business rather than for escrow as such, so the registration is what you check and not the word escrow. A lawyer's client account, which in most jurisdictions is governed by strict rules on client money. Or, across much of continental Europe, a notary, who in Germany can hold the price in an account in their own name under a trust instruction, a Notaranderkonto, though it is treated there as the exception rather than the norm because of the cost.

Two cautions on the lawyer route. The rules generally stop a firm being used as a plain holding account, so the lawyer needs to be genuinely instructed on the transaction rather than just lending you an account; in England and Wales that is explicit, and a breach is punishable on its own. And the supervising body is local, so a firm regulated in one country is not thereby regulated in yours.

What never works is an individual's personal account, whoever they say they are. If the proposal is to send funds there because escrow is slow or expensive, the proposal is to remove the only protection in the transaction.

A car in Germany, a seller in Switzerland, a buyer in the Gulf and a representative in London is an ordinary configuration rather than an unusual one, and it means none of the documents above have a single, obvious legal home. Every one of them should say which law governs it and where a dispute is resolved. A document silent on both is not a document that has been drafted for a transaction.

The choice is not cosmetic. How much a letter of intent commits you to, whether a non-circumvention restriction survives contact with a court, whether a fee protection agreement does anything at all: each of those answers changes with the governing law, and they change a great deal.

Arbitration is common in cross-border deals and is often the right answer, because an award is easier to enforce across borders than a foreign court judgment. It only works if the clause names a real institution and a seat. A clause pointing at a body that cannot be found, or at rules that do not exist under that name, is worse than no clause, because it looks like protection and is not.

Then there is the practical layer the paperwork tends to ignore: export and import, duties and sales taxes, the car's customs status, and the sanctions and source-of-funds screening that any bank moving this amount of money across a border will carry out. None of it is optional and all of it takes longer than people expect. Settle who is responsible for each part in the sale agreement rather than discovering it at a port.