Letter of intent (LOI)- Definition & Meaning

A letter of intent (LOI) is a document that outlines the basic terms and conditions of a proposed agreement between two parties. It is often used in business and legal contexts to indicate that both parties are interested in entering into a formal agreement, but the details of the agreement have yet to be worked out.

A letter of intent is not a legally binding document, but it can serve as a starting point for further negotiations and as a way to establish a level of commitment from both parties. It can also be used as evidence of good faith in case of any disputes that might arise later.

A letter of intent typically includes details such as the names of the parties involved, the purpose of the agreement, the key terms and conditions, and a timeline for completing the formal agreement. It may also include any contingencies or conditions that must be met before the agreement can be finalized.

Examples of when a letter of intent might be used include: -A company expressing its intent to purchase another company before the final contract is signed

• A company expressing its intent to lease a property before finalizing the lease agreement -A company expressing its intent to invest in a startup before finalizing the investment agreement

In summary, a letter of intent is a document that outlines the basic terms of a proposed agreement, it is not legally binding but it can serve as a starting point for further negotiations and as a way to establish a level of commitment from both parties.