• A letter of intent is a document that declares a preliminary commitment by one party to do business with the other.
  • The letter sets out the main terms of the proposed transaction and is commonly used in business transactions.
  • LOIs are useful when two parties initially come together to work out the general terms of a deal before dealing with the finer points of the deal.
  • The terms included in the LOI are specific provisions, requirements, deadlines and parties involved.
  • Many LOIs include non-disclosure agreements (NDAs) and no extortion clauses.
  • Letters of Intent are also used outside of the business world in any circumstance where two parties intend to work together or close a deal.