Letter of Intent (LOI)

A letter of intent (LOI) is written as a party's or individual's intention to commit to a transaction or any legally binding act. Therefore, it will often outline preliminary terms for an agreement and can even have a requirement to follow through with a formal contract within a set time frame.

Since the LOI pertains to future transactions or actions, it is not legally binding. It is possible for the LOI to fall through if certain provisions are not met. This letter of intent template will include everything that you need to know about an LOI, why you should use it, and what you should include in yours.

A letter of intent is a variation of a formal letter that expresses an individual’s intentions to perform a specific task or buy something. In business dealings, such a letter of intent can be useful in declaring a company’s position on an agreement or terms that both parties have settled on while negotiations may still continue.

A letter of intent sample allows you to show interest in a business and engage with it in a professional manner. You can state your interest without having to enter into a formal business arrangement. It is considered a show of good faith, as both parties are able to set their future plans without having to involve lawyers.  

A letter of intent is less of a contract and more of a record-keeping requirement in most business settings. Parties will often use an LOI to mark different stages of the negotiation leading up to the final agreement.

Two core factors determine if a letter of intent is legally binding: if it expresses one party's intent and if it contains all of the material terms of an agreement. For instance, during the A.J Richard & Sons, Inc. V Forest City Ratner Cos., LLC case, the judge deemed the LOI as legally binding since all future negotiations only concerned the finer details of their agreement.

You can use a letter of intent throughout various professional and business situations. Below, you can find some common types of LOI that fit more specific circumstances.

A letter of intent comes in handy to show that you are interested in buying a business, a commercial property, or even a residential property. However, you should explicitly state that this is not an official purchase agreement. The terms and conditions will be a part of the official purchase agreement, which relevant parties will sign off on.

It is also possible for you to send a letter of intent to a university for their scholarship program. The LOI should express excitement and appreciation for the opportunity.  It does not have to be very long, but it should be professional when addressing the right people.

If you plan to join a specific university or graduate school, you might have to send a letter of intent to that university. In fact, it is an essential part of the application process for many schools. The LOI should let the recipient know that you have submitted your application and list the graduate program you are applying for. 

An acquisition LOI is often similar to one you would send for buying a business, with the main difference being that the former should be confidential. Since it can include basic terms of agreement and price, you have to be careful that the letter of intent does not go past them. 

A letter of intent can be an effective way to inform a company that you are interested in working at a specific position or in a department. There might not be any openings for the job you are applying for, but if there are, then they are more likely to consider you.

Many people often get confused between a letter of intent and a cover letter. The differences can be even harder to notice when considering job hunting.

A letter of intent can differ depending on who you are sending it to. You can follow a letter of intent template, as some information remains similar regardless of who or what institution you are sending it to. Include a professional greeting that can be directed towards a specific individual in a company, but that is not necessary. You can move on with such points:

Following through on a letter of intent template is essential since it allows you to capitalize on opportunities you would have otherwise missed. Lenders sometimes require proof of a deal before providing any financing. Furthermore, this can also be useful to see if the party you are dealing with is committed to the agreement. Since the specifics of the deal can be negotiated later, it can also bookmark important milestones leading up to the final signing.

A letter of intent can be useful in various academic, professional, and business situations. And since it is versatile, writing one for your specific needs is never too complicated. This letter of intent template is a good place to start writing your own, as most of the rules stay similar.

Adding your recipient's name to the letter of intent is often good practice, except for instances where the letter addresses different people. But, sending the letter of intent to a specific person can increase the likelihood that the right people will even get your letter.

The next step is choosing a greeting, but you rarely need to deviate from the original “Mr./Ms Last Name." It is simple, succinct, and professional, and you no longer have to think about how to address them.

This part can change drastically depending on why you are writing your LOI. In fact, a good letter of intent template will leave this section blank since you need to fill it in yourself. If you are purchasing a business, mention your interest in the business and your asking price. But if you want to start working for a company, you can mention what makes you suitable to work there. You need to address the company or person and state your interest and reason for writing.

Make sure you use more formal closing statements like “Yours Truly” and “Sincerely,” with your name directly underneath.

Lastly, a letter of intent can also help students to land a position in a specific educational institution. For example, you may craft a letter of intent to express your interest in a particular university and highlight your qualifications and goals.

Additionally, it is important to be cautious because the LOI does not have legally binding terms. For example, suppose one party provides confidential information to the other party during the negotiation phase based on the LOI. In that case, there may not be legal protections in place to prevent the recipient from misusing or disclosing that information. These non-binding terms can potentially make either party responsible for something without any legal obligation.