Letters of Intent – By Type
Whether you’re negotiating a business partnership, merger, acquisition, joint venture, real estate transaction, or employment contract, the right LOI helps set the stage for what’s next. On this page, you’ll find templates for different types of LOIs, from business deals to job negotiations and beyond.
Show how your background and experiences align with a hiring company's values and goals. Highlight your readiness and enthusiasm for the position.
Job
Inform prospective defendants of your plan to sue and give them a chance to pay a settlement demand instead.
To Sue (With Settlement Demand)
Inform your landlord of your move-out plans.
Notice to Vacate
Express your interest in a potential purchase.
General Purchase
Explain your academic history and emphasize your excitement for attending the school and pursuing your academic goals.
School
Outline the desire to buy or sell a business and include the key terms for the transaction to take place.
Business
Show that an alien fiancé and a US citizen petitioner intend to marry each other within 90 days.
To Marry (Within 90 Days)
Introduce yourself and show interest in obtaining a paid or unpaid internship with an organization or company.
Internship
Formalize the student-athlete's commitment to play sports at NCAA schools.
National
Outline your interest in funding a business and include a basic outline of the proposed investment terms.
Investment (Business Proposal)
Show your commitment to undertake work for a general contractor.
Subcontractor
Establish how your donation will be used once the donee receives it.
To Donate
State your intention to purchase a limited number of shares at a specific price.
Stock (Shares)
Outline a potential collaboration between a software developer and an interested client.
Software Development
Document a potential transaction, such as the provision of goods or services over a given period of time.
Other Transactions
What Is a Letter of Intent?
A letter of intent, or a letter of interest, is a preliminary document that outlines the key points of a prospective deal. It’s a precursor to more binding agreements, such as purchase agreements, business contracts, joint venture agreements, or licensing agreements. An LOI ensures that all parties are aligned before moving forward, as it defines the nature of the business transaction and clarifies expectations.
Although typically nonbinding, a letter of intent signals serious interest and commitment to the deal. It often involves back-and-forth negotiations to refine the terms and create a foundation for the final agreement.
Conducting due diligence before signing an LOI is essential. It lets both parties check the accuracy of claims and decide if the deal is realistic. A letter of intent brings clarity and transparency to the process, smooths out negotiations, and sets the scene for a final, legally binding agreement.
An LOI Shows Your Commitment
An LOI shows your commitment to a deal, making it more appealing to the seller or counterparty than offers from others who haven’t formalized their intent.
| Type of Letter of Intent | Purpose |
|---|---|
| Real Estate | Purchase real estate at a fair price |
| Employment | Seek a job |
| To Sue | Sue a party or seek a settlement demand |
| Notice to Vacate | Leave a rental unit |
| General Purchase | Buy a piece of property |
| School | Apply for entry into a school |
Is a Letter of Intent Legally Binding?
A letter of intent usually isn’t legally binding, as it discusses a potential transaction. Still, it acts as a moral commitment between two parties promising to discuss a future arrangement in good faith.
Even though an LOI isn’t legally binding, it may contain certain sections that are. If the letter contains legally binding elements, it will hold one or both parties accountable to certain terms and be enforceable by the law.
An LOI can have the following legally binding elements:
- Confidentiality clause: Requires the parties to keep shared information private during negotiations.
- Exclusivity clause: Stops the parties from discussing deals with other buyers or sellers for a set time.
- Nonsolicitation clause: Prevents either party from using the deal to take clients, customers, or employees from the other party.
- Governing law clause: Specifies which jurisdiction will interpret the contract and how disputes should be handled.
- Indemnification clause: States whether one party must pay the other for any losses caused by breaches during negotiations.
Separate Confidentiality Agreement
If you need to share sensitive details, consider using a separate confidentiality agreement alongside your LOI.
Letter of Intent vs. Memorandum of Understanding
A letter of intent and a memorandum of understanding (MOU) are documents that show interest in making a deal. However, their use can vary depending on the situation.
An LOI is usually more formal and outlines the main points of a potential agreement. It helps start the conversation and sets the stage for future negotiations. An MOU is less detailed and usually serves as a general agreement or understanding between two parties.
For example, in a joint venture between two large companies, an LOI could define key terms like shared responsibilities or investments before moving to a formal contract. A smaller partnership, like a startup working with a supplier, might only need an MOU to cover basic terms without getting into specifics.
While both documents are typically nonbinding, they can contain binding elements. Whether an LOI or MOU is binding or nonbinding depends on what both parties agree on, so it’s important to be clear on the details.
What to Do Before Writing a Letter of Intent
Even though writing a letter of intent is a preliminary step in reaching a business agreement, you can still benefit from some prep work. Here are some steps to take before writing an LOI so you can be as clear and concise as possible in your message:
- Clarify the letter’s main objective.
- Gather key details, such as the names of the parties involved, key dates, terms, and conditions you want to address.
- Consider any contingencies or non-negotiables that you want to include.
- Research legal requirements or industry standards that relate to your deal.
- Evaluate potential risks or challenges that might come from your proposed arrangement.
- Ensure that the soon-to-be-written LOI will reflect previous discussions and verbal agreements to avoid confusion.
- Understand what comes after the LOI—whether further negotiations or a direct move to a formal contract—and prepare necessary documents like financing details, compliance records, or licenses.
How to Write a Letter of Intent
Writing a letter of intent involves expressing your interest and outlining the key terms of your proposal. While the following steps focus on writing an LOI for a purchase, you can easily adapt them for other situations.
1. Add the Initial Information
Include the date you’re writing the letter of intent to establish context for any deadlines or milestones you will present later.
Add your contact information in the header, including your name, address, phone number, and email address. This way, the recipient will know how to contact you for further discussions.
Identify the buyer and seller by writing their names in the designated spaces. The rest of the letter will refer to the buyer as the “Buyer” and the seller as the “Seller,” so it’s important to make this distinction early on.
2. State the Possible Purchase & Price
State the possible transaction and include a description of the property that the buyer may purchase.
List the property’s purchase price. You can also indicate when the buyer needs to pay it. They may need to pay upon the signing of the letter, the signing of a pending purchase agreement, or the buyer’s acceptance of the property.
When writing a letter of intent, you may not have a purchase price in mind. If you need to complete due diligence first, you can indicate that you don’t have a purchase price now.
3. Record Any Conditions
You may only want to proceed with the purchase if certain conditions are met. Use your letter to specify that the transaction hinges on the buyer’s ability to secure financing, the buyer’s inspection of the property, or another condition.
4. Provide Exclusivity & Confidentiality Statements
Clarify that the seller won’t negotiate with another potential buyer concerning the sale of the property. You can have this exclusivity clause last for a certain number of days or ensure it remains valid while the letter is effective.
You can also include a confidentiality clause, which ensures that the parties will keep the letter and its contents secret.
5. State the Termination Guidelines
State when or how the agreement will terminate. You can specify that it will end upon the earliest of one of the following events:
- signing of a purchase agreement by the parties
- mutual written agreement by the parties
- arrival of a predetermined date
6. Add a Non-Binding Effect
Add an explicit statement that this letter is simply one to show interest. Clarify that neither party has any obligation when they sign it. State that they must only adhere to the terms of exclusivity, confidentiality, termination and governing law.
7. Include Other Provisions
Include any other provisions to make your letter stronger and more specific. For example, you can provide a general timeline of how you’d like to see the purchase go. You may state that you’ll complete due diligence within 45 days or obtain financing within that same period. These milestones and deadlines can help facilitate future negotiations.
You can also write the state to indicate which government will oversee the letter’s contents. Naming a governing law can help if disputes arise when you negotiate the terms further, as you and the other party will know which laws will interpret the LOI’s terms.
8. Sign & Proceed
Obtain the parties’ signatures to formalize their intent. If there are multiple buyers or sellers involved, ensure to collect all signatures.
Once you sign the original letter of intent, you may start negotiations for a more formal agreement. For example, suppose you signed a subcontractor letter of intent. If you and the contractor negotiate terms you agree to, you may need to sign a subcontractor agreement to make the work relationship official.
Pros & Cons of a Letter of Intent
A letter of intent is very helpful, as it paves the way for more formal negotiations. Explore some additional benefits below.
Pros
- Provides a clear framework for more formal agreements
- Encourages parties to focus on key issues and terms
- Shows the parties have a serious intent but doesn’t bind them to anything
- Allows for flexibility, as the parties can make adjustments where needed
- Protects sensitive details with confidentiality clauses
Even though a letter of intent is a flexible document that lets you introduce your interest in business deals, it has a few drawbacks.
Potential Cons
- May result in wasted time and resources if one party doesn’t follow through
- May create a false sense of security for one party
- May cause one party to feel locked into place with the terms
- May result in disputes due to different interpretations of the terms
You can avoid the potential drawbacks of a letter of intent by writing a strong letter from the get-go. Ensure that you’re crystal clear about the document’s non-binding nature. Clarify that while the letter shows the parties’ interest, the parties can walk away at any time.
Once you make this clear, a letter of intent can be a great introductory tool for getting negotiations off the ground.
Letter of Intent Sample
View a letter of intent template so you can get an idea of what it looks like and how to write one.
Legal Considerations
A letter of intent traditionally isn’t legally binding, but it can include binding elements. To avoid unintended obligations, consider consulting a qualified attorney to review the terms and ensure the letter aligns with your intentions. This step helps protect your interests and clarifies which parts of the LOI, if any, carry legal weight.
How LegalTemplates Helps
LegalTemplates makes it easy to create a non-binding letter of intent. You can enter our PDF editor and input the details specific to your sale, job, educational opportunity, or other scenario. All the binding clauses, including exclusivity, confidentiality, termination, and governing law, are prewritten for you.
These clauses will hold you and the other party accountable for some aspects, but the actual intent will remain just that. It will be an expression of your interest rather than a genuine commitment. From there, you can refer to your completed letter during the negotiation process and hopefully reach a final agreement.
