A Letter of Intent (LIC) is non-binding and serves as a preliminary agreement before signing a binding contract. It is generally used to signal interest in pursuing a deal known to the LIC parties.
With this document, you can discuss the terms of a future agreement or continue to negotiate, all without involving an attorney's services for the informal nature of the LIC.
Suppose you are looking to enter into a business relationship with an individual or a company. In that case, you may want to signal your intention before getting into the nitty-gritty, whether this is because you are incredibly interested or for fear of another company beating you to the punch. With a LIC, you can demonstrate your agreement with specific terms as you continue to negotiate the rest.
As stated before, the LIC is more of a formality rather than a legally binding contract. It is most commonly used to propose purchases, mergers, and acquisitions. As part of the terms, a LIC can contain a price agreed upon in addition to other consensual details of the deal.
It is such a generally useful document. Even students use LICs to indicate their intention to accept a scholarship or college admission offer.
Depending on your state, a Letter of Intent may also be known as:
Sometimes companies and people are interested in collaborating, but they don't want to sign any agreement yet because they want more negotiating. Perhaps one party would like to purchase another party's estate but isn't sure about current liabilities. In these situations, they decide to sign a Letter of Intent to show good faith and interest in working together. It helps the two to negotiate terms and eventually come up with something that works for both.
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All you have to do is fill out a simple questionnaire, print, and sign. No printer? No worries. You and other parties can even sign online.
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After printing out the LIC, you might want to review and proofread it. After that, get everyone to sign it. Witnesses and notarization are not necessary as the LIC is not designed to be binding.
After signing the LIC, it is customary to distribute a copy to all involved. It does not have to be filed with any governing body.
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