Business Law

Letter of Intent (LOI)

Letter of Intent (LOI)

Letter of Intent (LOI)

A letter of intent (LOI) is a non-binding document that outlines the key terms and conditions of a proposed transaction or agreement between two or more parties. It serves as a preliminary step in the negotiation process, signaling the parties’ intention to move forward with a deal while allowing for further due diligence and negotiation. An LOI typically includes a description of the parties involved, the purpose and scope of the transaction, the key terms and conditions (such as price, payment, and closing date), and any contingencies or exclusivity provisions. It may also include provisions for confidentiality and the allocation of costs and expenses. LOIs are an important tool for businesses to clarify expectations, build trust and momentum, and minimize misunderstandings and disputes. They should be carefully drafted to accurately reflect the parties’ intentions and to avoid creating legally binding obligations.

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