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Letter of Intent Agreement

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LETTER OF INTENT AGREEMENT

This Letter of Intent Agreement ("LOI") is entered into as of Effective Date: by and between Party A: , an entity of type Corporation LLC Individual with principal place of business at (collectively, "Party A"), and Party B: , an entity of type Corporation LLC Individual with principal place of business at (collectively, "Party B").

RECITALS

WHEREAS, Party A and Party B have engaged in preliminary discussions regarding the contemplated transaction described herein (the "Proposed Transaction"), under which Party B would ; and

WHEREAS, the parties wish to set forth certain key terms and the framework for negotiation of definitive agreements relating to the Proposed Transaction while preserving certain mutual obligations described below; and

WHEREAS, this LOI reflects the parties' mutual understanding of principal commercial terms and the process by which the parties will proceed toward a definitive agreement.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. PURPOSE

The purpose of this LOI is to set forth the principal terms upon which the parties intend to negotiate and, subject to the terms of this LOI, enter into a definitive purchase agreement and ancillary documents (collectively, the "Definitive Agreements") relating to the Proposed Transaction.

2. PROPOSED ECONOMIC TERMS

Purchase Price: The aggregate purchase price payable in the Proposed Transaction shall be (the "Purchase Price"), subject to adjustment in the Definitive Agreements.

Payment Terms: Unless otherwise agreed in the Definitive Agreements, the Purchase Price shall be paid as follows:

Closing Date: The parties anticipate that Closing will occur on or about , subject to satisfaction of the conditions set forth in Section 6.

3. BINDING AND NON-BINDING PROVISIONS

The parties intend that the terms set forth in Sections 4 (Confidentiality), 5 (Exclusivity), 8 (Expenses), and 11 (Governing Law) shall be legally binding and enforceable obligations of the parties. Except for such binding provisions, this LOI is non-binding and does not create any obligation on either party to consummate the Proposed Transaction until Definitive Agreements, reasonably satisfactory to the parties, are executed and delivered.

4. CONFIDENTIALITY

Each party shall treat as confidential all non-public information disclosed by the other party in connection with the Proposed Transaction and shall not disclose such information except to its officers, directors, employees, agents, legal counsel and accountants on a need-to-know basis, and provided such persons are bound by confidentiality obligations at least as protective as those set forth herein. Confidential information shall not include information that (a) is or becomes publicly available through no breach of this LOI, (b) was in the receiving party's lawful possession prior to disclosure by the disclosing party, (c) is rightfully received from a third party without restriction, or (d) is independently developed by the receiving party.

The parties acknowledge that any breach of this Section 4 would cause irreparable harm for which monetary damages may be an inadequate remedy; accordingly, each party shall be entitled to seek injunctive or equitable relief to prevent or remedy any such breach in addition to any other remedies at law or in equity.

5. EXCLUSIVITY

For a period of days from the Effective Date (the "Exclusivity Period"), Party A agrees not to solicit, engage in or continue discussions with any third party regarding a transaction that would be similar to the Proposed Transaction. If Party A breaches this exclusivity, Party B shall be entitled to seek specific performance, injunctive relief, and any other remedies available at law or equity.

6. DUE DILIGENCE; ACCESS

During the Exclusivity Period, Party A shall afford Party B and its representatives reasonable access to all books, records, contracts, facilities and personnel reasonably required to complete Party B's due diligence. Such access shall be conducted during normal business hours and in a manner that does not unreasonably interfere with Party A's business operations. All materials produced in due diligence shall be subject to the confidentiality obligations of Section 4.

7. CONDITIONS TO CLOSING

The obligations of each party to consummate the Proposed Transaction shall be subject to customary closing conditions, including, without limitation: (a) the accuracy of the other party's representations and warranties in all material respects; (b) the performance of the other party's covenants; (c) receipt of all required consents, approvals and third-party waivers; and (d) absence of any material adverse change affecting the business, assets or prospects of the subject of the Proposed Transaction.

8. EXPENSES

Except as otherwise expressly provided in a Definitive Agreement, each party shall bear its own fees and expenses incurred in connection with the negotiation, preparation and execution of this LOI and any Definitive Agreements, including legal, accounting and other professional fees.

9. TERMINATION

This LOI shall automatically terminate upon the earlier of: (a) execution of Definitive Agreements by both parties; (b) mutual written agreement of the parties to terminate; or (c) expiration of the Exclusivity Period. Sections 3, 4, 5, 8, 11 and 13 shall survive termination to the extent they are expressly stated to be binding or by their nature survive termination.

10. NO SOLICITATION OF EMPLOYEES

During the Exclusivity Period and for a period of six (6) months following termination of this LOI, neither party shall directly solicit for employment any employee of the other party who has been involved in negotiations relating to the Proposed Transaction, provided that general solicitations not targeted to employees of the other party shall not be a breach of this Section.

11. GOVERNING LAW

This LOI shall be governed by and construed in accordance with the laws of the State of without regard to principles of conflicts of law. The parties submit to the exclusive jurisdiction of the courts located in that State for the resolution of any disputes arising hereunder to the extent such disputes relate to the binding provisions set forth herein.

12. ENTIRE AGREEMENT

This LOI, together with any written schedules or exhibits expressly incorporated herein, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous understandings, agreements, negotiations and discussions, whether oral or written, between the parties relating thereto.

13. SEVERABILITY

If any provision of this LOI is determined to be invalid, illegal or unenforceable in any respect, the remainder of this LOI shall remain in full force and effect and the invalid or unenforceable provision shall be reformed only to the extent necessary to make it enforceable while preserving the parties' original intent.

14. NOTICES

Notices to Party A

Notices to Party B

15. AMENDMENTS; WAIVER; COUNTERPARTS

No amendment or waiver of any provision of this LOI shall be effective unless in writing and signed by both parties. The failure of either party to enforce any right or remedy under this LOI shall not be deemed a waiver of that or any other right. This LOI may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Signatures delivered electronically shall be deemed original signatures for all purposes.

16. ADDITIONAL PROVISIONS

Each party represents and warrants that it has the full right, power and authority to execute and deliver this LOI and to perform its obligations hereunder. Except for the binding provisions expressly set forth in Section 3, no party shall have any liability to the other for any costs, expenses or damages arising out of or relating to this LOI, including any negotiations or termination hereof, except in cases of willful misconduct or breach of the binding provisions.

Party A:

By:

Date:

Party B:

By:

Date:

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What a Letter of Intent Agreement Is and When It’s Used

A Letter of Intent Agreement (LOI) is a preliminary written document in which parties outline the principal terms and mutual expectations of a proposed transaction or partnership before executing a binding contract. Common in mergers and acquisitions, real estate deals, joint ventures, and commercial agreements, an LOI frames scope, key obligations, price range, exclusivity, and due diligence timelines. It typically clarifies which provisions are intended to be binding and which are illustrative, helping parties negotiate efficiently while preserving rights. An LOI reduces uncertainty and sets negotiation milestones without creating full contractual commitments.

Why Draft a Letter of Intent Agreement Early in Negotiations

Use a Letter of Intent Agreement to document essential terms early, align expectations, and preserve negotiation leverage. It speeds due diligence, identifies binding versus nonbinding provisions, and creates a concise record of deal parameters that counsel and stakeholders can review before drafting final agreements.

Why Draft a Letter of Intent Agreement Early in Negotiations

Which Parties Typically Prepare or Sign an LOI

Parties commonly using a Letter of Intent Agreement include buyers, sellers, investors, and legal or business development teams.

  • Corporate development and deal teams: draft LOIs to frame term sheets and internal approvals.
  • Real estate brokers and property owners: outline key purchase or lease terms pending contract.
  • Investors and lenders: specify exclusivity, financing conditions, and due diligence timelines.

In practice, LOIs are often circulated among deal teams, finance, and outside counsel for approval before execution.

Common Signatory Roles and Their Responsibilities

Company officer

An authorized corporate officer, such as a CEO or president, may sign a Letter of Intent Agreement on behalf of the company when corporate bylaws or board resolutions grant express authority; include title and proof of authority if requested by counterparties or counsel to confirm signing power.

Authorized agent

An agent with a notarized power of attorney or corporate resolution can sign if the LOI permits representative execution; parties often request a certificate of incumbency or board resolution to validate the agent's authority and avoid later challenges to enforceability.

Step-by-Step: Completing a Letter of Intent Agreement

Follow this step-by-step process to complete a Letter of Intent Agreement accurately and consistently online.

  • 01
    Prepare: Gather party details and negotiation objectives.
  • 02
    Draft terms: Set price range, scope, and key dates.
  • 03
    Review: Counsel reviews binding language and risks.
  • 04
    Sign: Obtain signatures and distribute countersigned copies.

Core Sections to Include in a Professional Letter of Intent Agreement

Core sections of a professional Letter of Intent Agreement provide clarity on deal terms, timelines, and which provisions will survive into any definitive agreement.

Parties

Identify each party by full legal name, entity type, and principal place of business; include authorized representatives for negotiation and contact information for notices promptly.

Transaction

Describe the proposed transaction in specific terms, including assets, equity percentage, purchase price range, payment structure, and any contingencies or earn-outs, and identify closing conditions.

Exclusivity

State whether the parties agree to an exclusivity or no-shop period, length of exclusivity, permitted negotiations with third parties, and remedies for breach of exclusivity.

Due Diligence

Specify the scope and duration of due diligence, required document lists, access rights to facilities and records, confidentiality obligations during review, and expected completion date for diligence.

Binding Terms

Clearly indicate which provisions are intended to be binding—such as confidentiality, exclusivity, governing law, and expenses—and state that other terms are nonbinding until definitive agreements are executed.

Timetable

List key milestones, target closing date, notice and cure periods, and any conditions precedent; include a procedure to extend dates or terminate the LOI if milestones are not met.

Essential Information Fields for the LOI

Full legal name: Exact party name on record
Entity type: Corporation, LLC, individual, or trust
Addresses: Street, city, state, ZIP
Consideration: Price or description of exchange
Effective date: MM/DD/YYYY format required for obligations and timing
Signature lines: Name, title, date for each signer

How to Configure an Online LOI Signing Workflow

Configure an online Letter of Intent Agreement workflow to collect signatures, set authentication, and automate distribution to stakeholders.

Document field or workflow setting Configuration
Signature placement and required fields Drag-and-drop fields, required toggles per signer
Authentication and access controls by signer type Email link, SMS code, or KBA
Automated routing and notifications to internal approvers Set signing order and notify stakeholders
Record retention and audit trail Enable audit logs, timestamps, download copies

Typical Document Flow When Using an LOI

Typical routing for a Letter of Intent Agreement shows how documents move from drafter to signers and counsel before final distribution.

  • Upload: Sender uploads LOI and supporting exhibits
  • Assign: Place signature, initial, and date fields
  • Authenticate: Choose email, SMS, or advanced options
  • Complete: Signed copies and audit log distributed to parties

Technical Considerations for Sharing and Signing an LOI

Digital delivery and eSignature options for a Letter of Intent Agreement should support secure authentication, audit trails, and accessible signed copies for all parties.

  • Formats: PDF and DOCX supported
  • Integrations: CRM, cloud storage, and ERP
  • Authenticators: Email, SMS, and KBA options

Common Deadlines to Include in an LOI

Deadlines in a Letter of Intent Agreement typically cover exclusivity windows, due diligence cutoffs, and target closing dates.

Exclusivity or no-shop window length:

Specify start and end dates in MM/DD/YYYY format.

Due diligence document review deadline:

List required deliverables and completion date.

Target transaction closing date and time:

Conditional on satisfying conditions precedent and approvals.

Termination notice and cure period length:

State required notice days and cure opportunities.

Procedure and rights to extend dates:

Describe how to request extensions and who approves them.

Common Preparation Errors to Avoid

  • Failing to specify which LOI provisions are binding leads to disputes and may unintentionally create contractual obligations during negotiation.
  • Vague transaction descriptions that omit price ranges, payment structure, or closing conditions cause misaligned expectations and prolong negotiations.
  • Neglecting confidentiality language or stamping exhibits as nonconfidential can expose sensitive data and hinder due diligence sharing.
  • Skipping counsel review for binding clauses, governing law selection, or tax implications increases legal and financial risk for all parties.

Key Risks and Potential Consequences of a Flawed LOI

Unintended contract: Creates binding obligation
Confidentiality breach: Disclosure risk and damages
Loss of leverage: Negotiating position weakens
Regulatory exposure: Industry-specific compliance risk
Tax consequences: Unclear treatment may trigger audit
Enforcement costs: Litigation or arbitration expenses

Practical Drafting Best Practices for LOIs

Follow these best practices to draft an LOI that balances clarity with negotiability while protecting core legal rights throughout the process.

Define binding versus nonbinding sections
Explicitly state which clauses are intended to bind parties, such as confidentiality or exclusivity, and mark negotiation points as nonbinding; ambiguous language often leads to disputes and may unintentionally create enforceable obligations before final contracts.
Use clear timelines and milestones
Provide specific dates or relative periods (for example, '30 days from receipt') for diligence, exclusivity, and closing; include cure periods and extension procedures to reduce uncertainty and avoid inadvertent default or accelerated obligations.
Limit exhibits, schedules, and attachments
Attach only material summaries necessary for negotiation; extensive exhibits with detailed warranties or transfer provisions can convert the LOI into a de facto contract and complicate future bargaining, adding time and legal expense.
Engage counsel early for binding language
Have experienced counsel review exclusivity, confidentiality, expense allocation, and governing law clauses before signing to ensure intended nonbinding provisions remain advisory and to identify tax, securities, or regulatory issues that may require immediate attention.

Illustrative Examples: How LOIs Work in Practice

Real-world examples show how different industries use Letters of Intent Agreement to accelerate negotiations and limit exposure before definitive contracts.

Real Estate LOI

A developer used a Letter of Intent Agreement to lock basic purchase terms for a mixed-use parcel while completing environmental and title due diligence.

  • Exclusivity permitted a 60-day review.
  • Counsel negotiated a narrow binding confidentiality and exclusivity window, then converted agreed commercial terms into a purchase agreement; the LOI avoided premature exposure of financial models and clarified the parties' closing conditions.

Venture Investment LOI

An investor issued a Letter of Intent Agreement outlining valuation range, tranche conditions, and board observer rights before committing capital.

  • Due diligence completed in 30 days.
  • The LOI defined binding confidentiality and expense allocation; it preserved negotiation flexibility for both sides and provided a clear path to a definitive stock purchase agreement, shortening final legal drafting by several weeks.

Comparing LOIs with Related Pre-contract Documents

Key distinctions among Letters of Intent Agreement, term sheets, MOUs, and definitive purchase agreements help parties choose the right preliminary document.

Criteria LOI Term Sheet MOU Purchase Agreement
Comparative binding and enforceability status often nonbinding often nonbinding varies by terms binding when signed
Typical level of documented detail high-level key commercial terms broad principles complete legal terms
Primary purpose and negotiation role frame deal guide negotiation express intent finalize obligations
Relative legal risk and dispute likelihood lower moderate moderate high

eSignature Plan Comparison for Executing LOIs

Compare common eSignature plan features and base pricing as they relate to preparing and executing a Letter of Intent Agreement.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial Varies by plan Varies by plan Varies by plan Varies by plan
Bulk Send Yes Yes Yes Yes Varies
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No

Frequently Asked Questions About the Letter of Intent Agreement

Answers to common questions about preparing, signing, and enforcing a Letter of Intent Agreement, focusing on practical and legal concerns for U.S. users.


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