Take advantage of our Letter of Intent template to finalize every detail of a future written agreement. With our outline, you can facilitate the process of creating your LOI.
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Who will send the letter of intent? Who will send the letter of intent? The SellerLast Update August 4th, 2024
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Table of Contents:A Letter of Intent, or LOI, is a legal document that establishes the intentions and conditions for two or more parties to enter into a contract. It can be used as a precursor to a formal contract.
A Letter of Intent does the following:
A Letter of Intent is useful when you want to show good faith, and help to progress the process of creating a formal agreement.
The document will usually set a limit for creating and signing a contract.
There are various types of LOIs, such as for real estate purchases, attending college or graduate school, to hire an employee, and many other types of arrangements.
Use our Letter of Intent template as a foundation to help you create a document that includes all the terms and conditions of a future contract.
A Letter of Intent is normally non-binding. However, it does serve as an important means for establishing the terms and conditions for entering into a formal agreement.
For it to be enforceable, you would need to ensure there are terms that state the document is a binding agreement.
There could be certain consequences if a party does not comply with the agreed-upon terms of the letter if the document is binding.
For example, If one party drops out of the arrangement, they could be held financially liable for any financial damage the other party receives.
There are also different types of Letters of Intent that are specific to certain agreements and terms.
The following are common types of LOIs:
A Letter of Intent to Vacate is a document that a tenant sends to a landlord, notifying them of plans to leave the rental property. This letter typically outlines relevant details such as the expected move-out date and helps the tenant comply with notice periods.
A Purchase Letter of Intent is a preliminary agreement between a buyer and a seller, that lays out future terms of a purchase of goods, services, or property.
It outlines the key terms and conditions of the future transaction and serves as a foundation for formal contract negotiations.
To help clarify what a Letter of Intent should look like, we have included an example of an LOI.
To have a better understanding of how to outline your legal document, you can review the example of a Letter of Intent to purchase property below.
[Seller’s contact information]
This letter represents the terms and conditions to purchase the property located at [address] for $[price], and expect that this letter will serve as a formal agreement between [buyer] and [seller] under the laws of the state of [state].
The payment will be paid in [purchase terms].
[The buyer] has stated that their ability to acquire the property is [conditional or not conditional] on receiving financing from a bank.
The closing will be on [date], or before, if agreed mutually. Any costs related to the closing will be provided by the [buyer/seller/both parties]
The possession of the property will be given on [date] or before, if agreed mutually.
Once the legally binding agreement has been made, the buyer has the right to select someone to inspect the property on their behalf within X days.
This letter will be deemed non-binding, and the terms and conditions of this agreement are for the sole use of creating a future binding contract.
If you agree with the terms and conditions, sign and return a copy of this letter by [date].
There are various steps to follow to create a Letter of Intent and then complete a transaction.
Review and then complete the following steps to ensure your Letter of Intent is created correctly.
By doing these steps correctly and in order, you will have a formal agreement in place before drafting a contract.
Unless you state otherwise in your LOI, the agreement will not be legally enforceable until you sign a legally binding contract.
A Letter of Intent should include all the basic elements that would be included in its corresponding formal contract.
These include the names of each party, their contact information, the scope of work, deadlines, milestones, payment terms, and any other pertinent details.
To understand what to include in a Letter of Intent, review the following steps.
Write your full name and your address at the top of the document. This will serve as a return address to receive a copy of the letter in the future.
Add the name and address of the recipient, usually the seller. If it is a Letter of Intent for a job, this is where the employer’s information goes.
Ensure you add both the full name and full address to avoid any confusion.
Make sure to write a clear statement regarding if the letter will be binding or not. With a clear statement, both parties and any legal representatives can know if the document is enforceable or not.
Add all the basic information regarding the parties involved in the LOI. This means, including your full name as well as the other party’s full name.
Also, include your full address and the other party’s complete mailing address. Enter the payment details.
Include when one party will provide payments and how often.
In other words, how much the total amount is. Include if it will be paid all at once or in monthly or weekly payments.
Enter if bank financing will be a requirement for the buyer to complete a purchase. You can add if the agreement will be conditional upon the buyer obtaining financing or not.
Add the state jurisdiction that the Letter of Intent will fall under. This is important as certain states have different laws, and they may affect your LOI.
Add the signatures of both parties to the bottom of the document. Both you and the other party must sign the Letter of Intent.
Provide your signatures, along with the date and your names in print.
Download LawDistrict’s legal template to help you create a document that does not leave out any essential details.
A Letter of Intent can be used by a job applicant if you would like to be offered an employment contract. It mentions why the person writing the letter would like to work for a certain company.
This has a lot in common with a cover letter, and while some parts are very similar, there are key differences.
Check the table below to understand how to differentiate between a Letter of Intent and a cover letter.
| Letter of Intent | Cover Letter |
|---|---|
| Could be sent to a company when they are not hiring. | Sent when a company wants to fill a position. |
| Mentions motivations for working for a company. | Mentions motivations for working in a job position. |
| Introduces yourself and mentions your skills in the workplace. | Introduces yourself and mentions your relevant skills to the job position. |
Cover letters are used to apply for a specific position. If you would like to let a company know you would like to work for them, but they are currently hiring, you can send a Letter of Intent.
To provide a better understanding of how to write a Letter of Intent correctly, you can review a sample of the document below.
Apart from a Letter of Intent, some other legal documents can help you formally complete a transaction.
Using LawDistrict, you can receive help in similar situations by using related documents such as:
Review these documents to help you create your Letter of Intent or assist you in similar circumstances.
To further clear up any misunderstandings you may have about LOIs, we have answered the most common questions on the subject.
Review the following answers to the most frequently asked questions regarding Letters of Intent.
The length of a Letter of Intent depends on why it is written in the first place. Depending on what you are purchasing or for who it is, it may be longer or shorter than other letters.
Generally, a Letter of Intent should be no longer than 2 pages. This type of document does not need to be extremely long.
A Letter of Intent and letter of acceptance serve different purposes. A Letter of Acceptance (LOA) is a letter that confirms the acceptance of a bid or terms and conditions.
This is different from a Letter of Intent, which typically serves as a non-binding agreement.
A Letter of Intent could be prepared by anyone. There are other methods available, such as going to a lawyer.
By using our legal template, you can make the process much simpler.
Once you create your document, it is recommended that you have it reviewed by a legal professional, such as a lawyer, to ensure it is legally valid.
You are only a few steps away from your own Letter of Intent !
Download our professional examplesThe intent of this Letter is to provide a written expression of the mutual interest of the following Parties:
Buyer(s)In which Buyer(s) would purchase the business, materials, services or matters set forth in this Letter from Seller(s). This Letter also outlines some of the terms and conditions that a future agreement would include, as well as the exchange of information and documents that should take place in advance of the future agreement. The future agreement would require further documentation and approvals and the preparation of a definitive agreement which would set forth the material terms and a commitment from the Buyer(s) to purchase and the Seller(s) to sell.
A. Prospective Transaction
The transaction, which the Parties have expressed a mutual interest in, involves the transfer of _________ from the Seller(s) to the Buyer(s) ("Prospective Transaction").
The Prospective Transaction would involve payment from Buyer(s) to Seller(s) under the following terms: _________
C. Liabilities of the Seller
The Buyer(s) agrees to protect, indemnify, defend, and hold the Seller(s) harmless from and against any claims for liabilities, losses, expenses, or damages arising out of or resulting from any inspection of the property or any breach of this Agreement incurred by the Seller(s).
D. Due Diligence
Buyer(s) will be entitled to inspect and analyze the Seller's assets and inventory and the Seller's business and operations, including its books and records, customer orders, liabilities and prospects until the closing, or termination, of this Letter of Intent. Seller(s) will provide all information requested by Buyer(s) and Buyer(s) agrees to execute a Confidentiality Agreement and to not contact Seller's customers or suppliers unless authorized by Seller(s).
E. Contingencies
Before a final agreement can be made, Buyer(s) must be satisfied with the due diligence review and information and documents provided by Seller(s), as well as an authorization from the landlord to assume the lease, negotiation of employment contracts, environmental review (if applicable) and an agreement on the terms of the Definitive Agreement.
F. Definitive Agreement
The Definitive Agreement will be structured as a purchase and sale of assets and will include customary covenants, conditions and warranties.
G. Non-Binding Agreement
Except for the paragraph entitled "Public Announcements and Confidentiality Agreement", the provisions in this Letter of Intent are for informational purposes only and are nonbinding on all Parties. The Prospective Transaction requires further negotiation and documentation, including preparing and executing a final agreement. This letter does not require either party to proceed to the completion of a binding final agreement. The parties shall not be contractually bound to the sale, purchase or transfer listed above unless and until they enter into a formal, written final agreement, which must be in form and content satisfactory to each party and to each party's legal counsel, in their sole discretion.
H. Public Announcements and Confidentiality Agreement
All parties hereby agree not to release any information to the public with regards to this letter or any potential agreement without the separate written consent of all parties involved. All parties agree that the terms of this letter of intent and any negotiations shall remain confidential between the parties and their legal representation.
I. Closing, Termination of Letter
Closing shall occur no later than _________ days from the date the last signature is affixed hereto unless mutually extended by the Parties. The Letter of Intent terminates if Closing does not occur or has not been extended or if either Party provides written notice of termination. If the Letter terminates, the paragraph entitled "Public Announcements and Confidentiality Agreement" survives termination and continues to bind the Parties, as does any separately executed Confidentiality Agreement.
J. Expenses Associated with this Letter of Intent and Due Diligence
The Parties agree to bear their own expenses, including attorney's and professional fees associated with any due diligence or any other matter associated with this Prospective Transaction.
K. Governing Law
This letter shall be governed by the laws of the .
