Letter of Intent Details
What is a Letter of Intent?
A Letter of Intent, also known as an LOI or letter of interest, is a non-binding document that specifies one party's intentions towards another.
Generally, a Letter of Intent is used for business or real estate transactions to indicate an interested party's intention to purchase the business or property.
What is in a Letter of Intent?
A Letter of Intent includes information about:
- Both parties involved in the proposed transaction.
- A description of the transaction, meaning the property or business address, or specifications about what the Letter of Intent is for.
- Pricing and deposit details.
- What the terms are (if any).
A Letter of Intent will also list details regarding the intended transaction, such as, if it is real estate related, whether it is commercial, residential, industrial, agricultural, or recreational property.
In a business transaction, it would specify what was being purchased, such as assets (furniture, supplies, vehicles), or shares.
You may also include clauses in regards to confidentiality, if necessary.
What Should I Use a Letter of Intent For?
A Letter of Intent can serve many purposes, the most common being that it can provide a clear, concise version of your negotiations prior to signing a binding contract. This means that both parties involved can ensure they are on the same terms, and in agreement, before the transaction moves on to the next step.
Is a Letter of Intent Legally Binding?
LawDepot's Letter of Intent is not legally binding. A Letter of Intent serves to outline the terms of an agreement before an actual contract is made.
For example, if you intend to purchase a business, but are waiting on certain details to be finalized before going ahead, you may wish to use a Letter of Intent to show the seller that you are serious about your intentions in relation to purchasing their company.
This would not make you legally obligated to purchase the business, but would simply make your intentions clear to the seller.