What is a Letter of Intent?

A letter of intent (LOI) is a document that outlines one or more agreements between two or more parties before the agreements are finalized. The letter of intent may be used for a variety of purposes, including to outline the terms of a proposed agreement, to confirm a verbal agreement, or to document the intention of two or more parties to enter into a contract.

When to Use a Letter of Intent

A letter of intent is most often used when parties are considering entering into a contract or agreement, but they are not ready to commit to the full terms of the agreement. It can be used to outline the key elements of an agreement and to ensure that both parties are on the same page before any negotiations begin.

Examples of a Letter of Intent

Letter of Intent for a Business Purchase

For example, a letter of intent may be used when two parties are considering entering into an agreement to purchase a business. This letter of intent outlines the terms of the purchase, including the purchase price, the closing date, and any other conditions that must be met before the sale is finalized.

Letter of Intent for an Employment Offer

A letter of intent may also be used to outline an employment offer. This letter may outline the details of the offer, such as the start date, salary, benefits, and any other conditions that must be met before the offer is finalized.

Benefits of a Letter of Intent

A letter of intent can be a useful document for both parties involved in an agreement. It can help to ensure that both parties understand the terms of the agreement and can help to protect both parties in the event that a dispute arises. It can also help to streamline the negotiation process, as both parties will have a clear understanding of the terms of the agreement.