Letter of Intent Agreement

This letter of intent is a practical first step for two or more parties planning a business transaction. It functions like a term sheet: the LOI outlines key points, intent establishes expectations, and provides a clear roadmap for more detailed negotiations that lead to a formal contract and definitive agreements. Most LOIs are non-binding overall, and this form says it is not an enforceable legal contract; however, many LOIs also include binding provisions. In this document, non-binding terms capture a party's preliminary commitment on key terms such as purchase price, financing terms, payment terms, and next steps, while certain clauses can be legally binding on one or both parties.

The agreement organizes all the details needed to proceed. It calls for due diligence and review, with information protected by a separate confidentiality clause via a Confidentiality Agreement. It sets deadlines for a closing date and emphasizes that time is of the essence.

It requires both organizations to conduct business in the ordinary course and avoid undisclosed material changes. It covers expenses (each party pays its own unless otherwise stated), public announcements (no disclosure without consent), and exclusive negotiating rights so one party does not shop the deal while talks continue. A remedy clause allows equitable relief for breaches, and governing law and venue are identified. An entire agreement and binding effect section clarifies that although the business deal terms are preliminary, some provisions can bind the parties involved. The Purchase Agreement will contain all fundamental terms and serve as the final agreement.

Use cases include two companies planning an acquisition to secure space or assets, a joint venture exploring a new program, or a buyer and seller framing contingencies to determine risk, financing, and completion. LOIs also appear in other contexts, such as education or an employer relationship, where a letter outlines interest in a particular purpose; however, this form is tailored to a business deal.

Proposal Kit helps organizations write accurate LOIs and related documents. Its template library and document assembly simplify creation, its automated line-item quoting supports money and pricing details, and its AI Writer can build supporting documents like a cover letter or example language. These tools make it easy to plan, introduce, and finalize the creation of documents that fit unique needs and workflows.

Beyond setting a clear roadmap, a letter of intent LOI gives context for when a binding agreement should follow and when non-binding provisions should guide the negotiation process. The document is typically drafted to include non-binding sections that capture one party's preliminary commitment without guarantees, while certain terms may act as binding clauses (for example, confidential handling of data) to protect both sides. This framework helps an organization begin, engage stakeholders across departments, discuss risks, verify claims, and decide whether to proceed. In complex circumstances or regulated industries, parties commonly consult advisors to explain practices, align with regulations, and achieve transparency about the outcome presented to leadership.

Consider these specific examples. A firm seeking to acquire a smaller competitor may outline valuation assumptions and milestones, generally leaving price and financing open until finalizing definitive documents. A vendor partnership can demonstrate operational fit while keeping non-binding clauses around scope and schedules. Outside pure commerce, a graduate school or a job seeker may use an LOI format to outline interest and expectations; while the context differs, the important purpose remains to outline intent and the following information needed to resolve open questions before a formal commitment.

Proposal Kit supports creating and writing these documents in an easy way. Its extensive template library and document assembly help outline key terms, present a clear structure, and keep the process consistent. Automated line-item quoting assists with money and pricing details, while the AI Writer can generate a supporting narrative to explain assumptions or a cover letter. Teams can fit these assets into automated workflows to coordinate inputs across departments and keep the framework consistent from first write to finalizing the Purchase Agreement.

This article adds perspective on several important purposes of the LOI that affect the outcome and the relationship between the parties involved. The exclusive negotiating rights clause creates a focused window to complete detailed negotiations without outside offers distracting the seller or buyer, helping both sides align resources and meet deadlines. The public announcement restrictions promote transparency and control over messaging while still allowing necessary disclosures to third parties whose consent is required.

The continuity/employment section, though to be completed during writing, signals that the organization should outline transition plans, workforce considerations, and a program for business continuity so operations can proceed from signing to completion. Governing law, venue, prevailing-party fees, and equitable relief provisions provide a practical framework to resolve disputes quickly, while assignment limits ensure the parties to the deal remain the same unless both consent.

Among the LOI's important purposes is clarifying that all fundamental terms move into the final agreement, while the letter outlines the next steps to verify facts and finalize the creation of definitive documents. Non-binding provisions guide the process, and any binding clauses, such as confidential information handling, act to protect both sides during diligence. This structure is typically drafted so that an LOI outlines how departments engage, what information is required, and how the parties will consult advisors, comply with regulations, and demonstrate readiness to move from interest to finalizing the formal contract.

Proposal Kit supports teams by giving an easy way to plan and write a letter of intent LOI that is accurate and presented clearly. Templates help you outline specific examples and non-binding sections, while automated line-item quoting supports pricing models that may later appear in the Purchase Agreement. Its AI Writer can help create companion materials and explain assumptions for leadership review, and automated workflows can standardize practices across a firm as you begin, discuss, decide, and achieve the final agreement.

How to write my Letter of Intent Agreement document - The Narrative

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