Letter Of Intent Template

In plain language: Identifies the sender and recipient by full legal name, address, and the date the letter is issued.

Common mistake: Using trade names instead of registered legal entity names. If a dispute arises, enforcing even the binding provisions becomes complicated if the party names don't match corporate records.

In plain language: States the nature of the proposed transaction and the parties' shared intent to negotiate toward a definitive agreement.

Common mistake: Writing a vague purpose statement that fails to identify the specific asset, business, or relationship at issue — making the LOI difficult to reference during later negotiations.

In plain language: Summarizes the material economic terms being proposed — purchase price, payment structure, equity split, or other core commercial terms.

Common mistake: Leaving price or consideration ranges so wide that the LOI creates no useful anchor for negotiation — a $1M–$5M range is not a proposed term, it is an opening position.

In plain language: Lists the conditions that must be satisfied before the parties will be obligated to proceed to a definitive agreement.

Common mistake: Omitting financing contingencies for buyers who require third-party funding. A buyer who cannot close because of missing financing, without a contingency on record, risks damaging the relationship and potentially triggering disputes.

In plain language: Grants the buyer or investigating party reasonable access to documents, personnel, and records needed to complete their review.

Common mistake: Not setting a defined end date for the due diligence period. An open-ended review gives one party unlimited leverage to delay while the other party is locked out of the market.

In plain language: Restricts the other party from soliciting or entertaining competing offers during the negotiation window.

Common mistake: Making the exclusivity clause non-binding when the intent is clearly to prevent a competitive process. Exclusivity and confidentiality are the two provisions most commonly — and intentionally — drafted as binding even in an otherwise non-binding LOI.

In plain language: Obligates both parties to keep the existence and terms of the LOI, and any information exchanged during negotiations, confidential.

Common mistake: Relying on a separate NDA and omitting confidentiality from the LOI entirely. If the NDA is not executed before the LOI is shared, there may be a window during which the transaction terms are unprotected.

In plain language: Sets the deadline by which the parties intend to execute a definitive agreement, and the date on which the LOI itself expires if not accepted.

Common mistake: Setting unrealistically tight timelines — particularly for acquisition LOIs where due diligence and financing typically require 30–90 days. Missed deadlines erode trust and invite renegotiation.

In plain language: Explicitly states which provisions are non-binding (the deal terms) and which are binding (typically exclusivity and confidentiality), to prevent either party from claiming the LOI created an enforceable contract.

Common mistake: Failing to specify which sections are binding. A court may treat the entire LOI as either fully binding or fully non-binding depending on its language — neither outcome is typically what either party intends.

In plain language: States the applicable law for interpreting the LOI and provides a signature block for both parties to acknowledge receipt and agreement with the terms.

Common mistake: Skipping the signature block because the LOI is 'just preliminary.' Even a non-binding document benefits from dated signatures — they establish a clear timeline and demonstrate mutual acknowledgment of the terms.

A letter of intent (LOI) is a formal written document that summarizes the preliminary terms and mutual understanding between two parties before a binding contract is drafted. It is commonly used in business acquisitions, real estate transactions, partnership negotiations, and senior employment offers. Most LOIs are intentionally non-binding on the deal terms, while specific provisions — typically exclusivity and confidentiality — are drafted as binding.

Generally, an LOI is not legally binding on its core deal terms — that is its purpose. However, specific provisions such as exclusivity, confidentiality, and governing law are typically written as binding even within an otherwise non-binding document. Courts have occasionally found entire LOIs to be binding when the language was ambiguous, so including a clear non-binding disclaimer with specific carve-outs is essential.

Both documents serve the same pre-contract function, but they are used in different contexts. A term sheet is most common in investment and financing transactions, focusing on deal economics such as valuation, equity percentage, and investor rights. An LOI is broader and is used across acquisitions, real estate, partnerships, and employment. The two terms are sometimes used interchangeably in M&A contexts.

A memorandum of understanding (MOU) and an LOI serve similar purposes but differ in tone and context. An LOI is typically used in commercial transactions where one party is proposing specific terms to another. An MOU is more common in government, nonprofit, and interagency contexts to document mutual cooperation without a commercial transaction at its center. Both are generally non-binding unless specific provisions are designated otherwise.

Use an LOI when you want to document agreed-upon preliminary terms and signal serious intent before investing in the full legal and due diligence process. It is most useful in business acquisitions, commercial real estate offers, joint venture or partnership discussions, and senior executive hiring. It is less appropriate for straightforward vendor contracts or service agreements, where moving directly to a binding contract is faster.

A signature is not legally required for an LOI to serve its purpose, but requesting countersignature from the recipient is strongly recommended. A dated signature from both parties establishes a clear record of mutual acknowledgment, creates an enforceable exclusivity and confidentiality obligation, and provides a reference point if negotiations later become contentious.

For business acquisitions, 30–60 days is the standard range — enough time to complete due diligence and negotiate the definitive agreement. For commercial real estate, 14–30 days is more typical. For partnership or employment LOIs, exclusivity is sometimes omitted entirely. The period should be long enough to allow meaningful progress but short enough to protect the target from being locked out of the market indefinitely.

Yes. An employment LOI is a formal pre-offer document used for senior hires, executive placements, or roles where compensation is subject to board approval. It outlines the proposed title, compensation range, start date, and conditions of employment before a full employment contract is drafted. Unlike a standard offer letter, it explicitly preserves the non-binding nature of the terms until a contract is executed.