Letter of Intent

A Letter of Intent is used to outline the terms of a potential business deal as understood by all parties and your intention to pursue the deal.

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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.

What Is a Letter of Intent?

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.

Other Names for a Letter of Intent

Depending on your state, a Letter of Intent may also be known as:

  • Assurance Letter
  • Letter of Assurance
  • Letter of Interest
  • Memorandum of Understanding
  • Terms Sheet

Who Needs a Letter of Intent?

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.

Why Use 360 Legal Forms for Your Letter of Intent?

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Create your own documents by answering our easy-to-understand questionnaires to get exactly what you need out of your Letter of Intent.

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Laws vary by location. Each document on 360 Legal Forms is customized for your state.

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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.

How to Create a Letter of Intent with 360 Legal Forms

Drafting a Letter of Intent doesn't have to be a hassle. You can create yours with a few clicks on our website. Make sure to include all the necessary information.

Let 360 Legal Forms help with our extensive library of attorney-vetted legal forms. The process is fast and easy. All you have to do is fill out our easy-to-understand questionnaire. Once complete, simply download your form as a PDF or Word document from your secure online account.

What Information Will I Need to Create My Letter of Intent?

To create your document, please provide:

  • Parties Information: The names of the individuals or companies writing the Letter of Intent, the contact number, and addresses.
  • Terms: Describe all of the terms agreed upon, including the price as appropriate.
  • Closing Date: The latest date when the parties enter into an agreement for the matter at hand.
  • Contingencies: Conditions determining if the deal goes through or not.
  • Governing Law: The state's law applying to the Letter of Intent.

Letter of Intent Terms

  • Terms: Anything agreed upon, including the purchasing price.
  • Covenants: Promises made while negotiating the deal.
  • Confidentiality: In the context of a Letter of Intent, this is the condition to keep information private regarding the potential deal.
  • Special Terms: Any other terms, usually non-standard, agreed upon.

Letter of Intent Signing Requirements

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.

What to Do with Your Letter of Intent?

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.

Frequently Asked Questions

Companies use LICS for business negotiation in anticipation of a future agreement. Prior to an official deal, they can take their time affirming to the terms satisfactory to all. There are several types of business LICS. Most commonly, it is used to signal an intention to purchase a real property, a business, a vehicle, and the like. You can even use a LIC to show interest in working for a particular company. Students can use a Letter of Intent to formally accept a scholarship offer and student-athletes would do the same to show a commitment to accept a sports scholarship offer from a university – where top-ranked high school athletes in the major sports often make the news after signing a LIC.

Although the LIC is not a requirement, it can give both parties confidence that this is a serious deal in the works, where a LIC can be used as a guideline for the agreement that is to happen in the future. In the meantime, you can inspect the LIC for any terms that you might want to change or negotiate before arriving at the definitive agreement. Banks might also demand to see a LIC before authorizing to finance the business deal made.

LICS do not have to be notarized. Doing so will not add any weight to the document, which is technically not enforceable to begin with, so it could only be a waste of time and money.

As mentioned, LICs are not legally binding. Any company or person party to the LIC can back out of the deal being negotiated at any time and there is no recourse to all other parties involved. The LIC is simply not designed to be used in this way.

A Letter of Intent is a show of good faith and nothing more than that. It serves as a roadmap leading to the parties involved entering into a formal agreement, assuming that everything goes to plan.

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