Letter of Intent template

Free letter of intent template

A letter of intent (LOI) is a document that outlines the preliminary understanding between two parties who intend to enter into a formal agreement. An LOI can also be referred to as a term sheet or Memorandum of Understanding (MOU) and is typically used in business transactions, such as mergers, acquisitions, or partnerships, and the purchase of real estate. Whatever the scenario, the letter of intent ensures both parties are aligned before finalizing the purchase.

Docusign provides a standard letter of intent template that gives you the capability to edit the details of this pre-purchase contract - all online. The template is customizable so it can reflect the specific terms of the intentions of both parties. Once you’ve finished editing it to the needs of the transaction, you can download, print, or send it for signatures using Docusign. To get started, click on the template below:

To establish a clear framework for your next negotiation, formalizing your intent with a terms sheet is the ideal next step. Use our blank template to outline the terms, then send it with Docusign to create a secure and professional document for both parties. This makes the entire process more efficient and secure. Ready to move your deal forward? Get started with a free Docusign account today.

What is a letter of intent?

A letter of intent (LOI) is a document that declares one party’s preliminary commitment to agree to do business with another. The letter outlines the terms of the agreement, such as key points that need to be negotiated and steps both parties agree to take before, during, and after the transaction.

LOIs are typically drafted by a business’s legal team, after that business conducts due diligence research into the company they plan on working with. This usually happens during early negotiations with that company. Businesses use LOIs for a wide variety of major transactions, including mergers and acquisitions, joint ventures, and real estate leases.

LOIs also commonly include nondisclosure agreements (NDAs) outlining the elements of the deal that both parties must keep confidential.

What is the purpose of a letter of intent?

A letter of intent (LOI) can accomplish a few different purposes. First and foremost, they specify and clarify the specifics of a transaction, ensuring that both parties involved have a clear understanding of what they agree on and what they expect from each other.

Creating an LOI during the negotiation process is a good way to avoid future misunderstandings that could disrupt the eventual completion of the transaction. When both parties understand the terms they’re agreeing to from the outset of negotiations, it can significantly expedite the negotiation process and even the execution of the deal.

LOIs can also safeguard both parties during the deal-making process. Though LOIs are not themselves legally enforceable documents, they often contain provisional clauses—such as NDAs—that are binding. Including such provisions helps ensure that the other party doesn’t accidentally or willfully misinterpret the terms of the deal and inconvenience their would-be partner.

Different types of letters of intent

There are several different types of LOI. A few of the most common include: 

• Business letters of intent: The primary example used here. Business LOIs announce a preliminary agreement between businesses. This type of LOI outlines the details of the deal and what each party requires of the other to reach agreement.

• Education letters of intent: LOIs may be used as part of a student’s application to a college or university to declare their interest in studying there. LOIs are often used by student-athletes to negotiate scholarships in exchange for playing for the school’s team.

• Employment letters of intent: A job seeker may write an LOI declaring their interest in working for an employer. Employer LOIs differ from cover letters because cover letters focus on a specific position, while employer LOIs usually focus on the whole organization.

• Government grant letters of intent: Organizations send government grant agencies LOIs to solicit their government grants. These LOIs outline what the project seeking funding will accomplish, and how the organization will apply the money it’s asking for.

• Real estate letters of intent: Prospective real estate buyers may write an LOI to indicate their interest in purchasing a property. Landlords and prospective tenants may also use these LOIs to detail rent agreements.

How to write a letter of intent and what is included

Though they take the form of a letter instead of a list or outline, LOIs are similar to term sheets. They typically follow a standardized format and include the following information:

• Parties involved: Clearly identify all parties, including names and addresses.

• Purpose: State the intent and nature of the potential agreement.

• Key terms and conditions: Summarize the principal terms (such as the subject matter, price or terms, due diligence, confidentiality, exclusivity, timeline, and any other essential provisions).

• Binding/non-binding nature: Clarify whether the LOI is legally binding or non-binding.

• Governing law: Specify which jurisdiction’s laws will apply.

• Expiration: Set an expiration or deadline for the LOI’s validity.

• Signatures: Include signature lines for both parties to confirm their understanding and intent.

Additional (Optional) components

Depending on the nature of the transaction or relationship, you may also wish to include:

• Confidentiality: An agreement to keep negotiations and terms private.

• Exclusivity: A clause preventing either party from negotiating with others for a specified period.

• Conditions precedent: Any conditions that must be met before a formal agreement is signed.

• Non-solicitation or non-compete: Restrictions related to hiring or competition during negotiations.

• Termination rights: How and when either party can withdraw from discussions.

Your LOI should be clear, concise, and precise. As you write, it may help to review expert guidelines for effective LOI writing or to create and follow an outline to keep your LOI focused and organized.