Letter of Intent, or LOI, is a document outlining preliminary agreement between parties before a formal contract is executed. LOIs express serious interest and commitment while allowing time to finalize details, conduct due diligence, or secure approvals. In business contexts, LOIs are used for major purchases, partnerships, or acquisitions to establish key terms and demonstrate good faith before investing in detailed legal agreements. While often non-binding, LOIs create momentum and framework for completing transactions.
Frequently Asked Questions
A Letter of Intent (LOI) for business transactions should include key terms like price, timeline, and conditions of the deal. It should clearly identify all parties involved and outline the transaction's structure, whether it's an acquisition, partnership, or investment. The document should specify any contingencies that must be met before finalizing the agreement, such as due diligence requirements or regulatory approvals. While non-binding overall, clearly state which sections are legally binding, typically confidentiality and exclusivity provisions. Finally, include a proposed closing date and signatures from authorized representatives of each party to demonstrate mutual interest in moving forward.
A Letter of Intent (LOI) for business transactions should include key terms like price, timeline, and conditions of the deal. It should clearly identify all parties involved and outline the transaction's structure, whether it's an acquisition, partnership, or investment. The document should specify any contingencies that must be met before finalizing the agreement, such as due diligence requirements or regulatory approvals. While non-binding overall, clearly state which sections are legally binding, typically confidentiality and exclusivity provisions. Finally, include a proposed closing date and signatures from authorized representatives of each party to demonstrate mutual interest in moving forward.
A Letter of Intent (LOI) in sales agreements is generally not fully legally binding, but certain provisions within it may be enforceable. Typically, an LOI outlines preliminary terms and intentions while explicitly stating that a formal agreement will follow. Provisions like confidentiality clauses or exclusivity periods are often binding, while the main commercial terms remain non-binding until a definitive agreement is signed. For example, when acquiring a business, an LOI might legally prevent the seller from entertaining other offers for 60 days while allowing either party to walk away from the main transaction. Always consult legal counsel when drafting or signing an LOI, as specific wording and jurisdiction laws significantly impact its enforceability.
