Free Letter of Intent Templates

A letter of intent (LOI) is a preliminary document that you draft before signing a legal contract with another party. It sets up negotiations and helps you express interest in doing business or otherwise engaging with a person or entity.

A strong letter of intent creates a mutual understanding. It clarifies the following information:

• The parties’ relationship to each other
• The parties’ shared goals
• The scope of the transaction they’d like to enter

When you write a letter of intent, start by clearly stating the parties’ mutual interest in working together. Or you may express only the proposing party’s interest if it’s still early in the process.

The entire LOI should not exceed one page. A short, concise letter keeps the terms easy to review and understand.

A letter of intent is not legally binding. In most cases, you are allowed not to follow through with the proposed terms.

However, you should note whether the letter of intent contains an express clause requiring both sides to negotiate in “good faith.” If your LOI includes this clause, you must negotiate in good faith and abandon negotiations only for a valid reason. Valid reasons for abandoning negotiations may include the discovery of an issue during due diligence or the other party’s failure to meet a precedent condition.

Depending on your letter of intent, you may be legally bound to certain terms. For example, if your letter of intent contains any of the following provisions, they may be legally binding:

• Confidentiality
• Exclusivity
• Nonsolicitation
• Governing law
• Indemnification

Once you write a letter of intent, you may then draft a memorandum of understanding (MOU) to define strategic responsibilities before writing a final, binding contract.

Writing a letter of intent helps you communicate your interest in a transaction and define the potential terms. By proposing the transaction, you can easily set the stage for compromises and work toward finalizing a deal. Follow the steps below when creating a letter of intent.

1. Name the parties. Identify the sender and the receiver to make it clear who is involved.
2. Describe the transaction. Describe the transaction that might occur. It could be a purchase, a partnership, or another type of collaboration.
3. Consider adding any agreed-upon terms. An LOI should leave room for negotiation. However, you may use Legal Templates’s form to add terms that have already been agreed upon to solidify mutual terms.
4. Record any conditions. Note whether the transaction is contingent on any actions. For example, you may note that one party must acquire a business license or obtain approval from their company’s board of directors before a certain date.
5. Include confidentiality provisions. Protect information shared during negotiations by adding a confidentiality clause. This is especially important if the parties decide not to proceed with their engagement, as it gives the disclosing party some protection for a specific period.
6. Add a termination date. Specify an expiration date for the letter of intent to set a timeline for negotiations.
7. Finalize the LOI agreement. Include any final provisions, exclusivity clauses, the governing law for any legally enforceable terms, and the date you’re writing the letter.

View an example of our template to see what a letter of intent looks like. Fill out Legal Templates’s guided form with unique details relating to the parties and transaction you’d like to enter. Once you’re done, you can download a document that follows the standard letter of intent format in PDF or Word.