Letter of intent

Uncommon card · No. 196411

A letter of intent (LOI or LoI) is a document outlining the understanding between two or more parties which they intend to formalize in a legally binding agreement. The concept is similar to a heads of agreement, term sheet or memorandum of understanding. Merger and acquisition agreements, joint venture agreements, real property lease agreements and several other categories of agreements often make use of a letter of intent. LOIs resemble short, written contracts, often in tabular form. They are not binding on the parties in their entirety. Many LOIs, however, contain provisions that are binding, such as those governing non-disclosure, governing law, exclusivity or a covenant to negotiate in good faith. An LOI may sometimes be interpreted by a court of law as binding the parties to it if it too closely resembles a formal contract and does not contain a clear disclaimer. An LOI may be presented by one party to another party and subsequently negotiated before execution (or signature). If...

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