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Free US Law Dictionary

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Related Phrases

Letter of Intent

A letter of intent or LOI is a document outlining an agreement between two or more parties before the agreement is finalized. The concept is similar to the so-called heads of agreement. Such agreements may be Asset Purchase Agreements, Share Purchase Agreements, Joint-Venture Agreements and overall all Agreements which aim at closing a financially rather large deal.

LOIs resemble written contracts, but are usually not binding upon the parties in their entirety. Many LOIs, however, contain provisions that are binding, such as non-disclosure agreements, a covenant to negotiate in good faith, or a "stand-still" or "no-shop" provision promising exclusive rights to negotiate. A LOI may also be interpreted as binding the parties if it too closely resembles a formal contract.

The purposes of an LOI may be:

  • to clarify the key points of a complex transaction for the convenience of the parties
  • to declare officially that the parties are currently negotiating, as in a merger or joint venture proposal
  • to provide safeguards in case a deal collapses during negotiation

A LOI may also be referred to as a memorandum of understanding (MOU), term sheet or discussion sheet. Although the terms refer to different documents, the differences are often formal in nature, reflecting different drafting styles or business customs, not a substantive difference in what these various documents accomplish.

Related Law Blog Posts

Don?t Be Coy With a Letter of Intent
I recently worked on a deal where the prospective seller over-strategized the letter of intent. The seller wanted my client to sign a non-binding LOI that contained about half of what should have been included in the letter...

Letter of Intent
Vor allem im Vorfeld von Unternehmenskäufen, aber auch bei größeren IT-Projekten und anderen geplanten Kooperationen schließen die potentiellen Vertragspartner oft sogenannte “Letter of Intent“...

More on Letter of Intent and Release Bargaining
Last month I highlighted the story of DeMarcus Cousins, a blue chip high school basketball recruit who was playing a game of chicken with the University of Alabama-Birmingham (UAB) over signing his National Letter of Intent — the letter that commits a player to attend the university and imposes the penalty of giving up a [...

Handwritten Letter of Intent Worth $10.5 Million
According to Newsday.com, a jury has awarded $10.5 million to internet executive Alfred West in his suit to enforce a handwritten agrement with IDT Corp...

Time to Revise the National Letter of Intent?
Over on Sports Agent Blog, Marc Isenberg has an excellent piece that proposes a revision of the National Letter of Intent...

Action Item - Start Writing Your Letter of Intent
Some people get overwhelmed with the idea of getting their affairs in order and as a result find it easier to do nothing...

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Did I harass someone?
Oh, yes. This can be taken in as so many things, especially since you had testif...

Can failure of an employer to provide healthy working conditions lead to wrongful discharge?
The Occupational Safety & Health Administration (OSHA) protects workers from...

Can a creditor/collection agency call other employees at your place of work AND call your adult children who live in another state?
A creditor can call you at home, several times a day if you aren't answerin...

Can I be held responsible for paying child support if I signed a birth certificate of a child that was not mine (am not the biological father)?
Get yourself some legal counsil straigth away. Explain you situation to him/her ...

What is comparative negligence and strict liability in tort law?
A. comparative negligence
B. seller sells to buyer
B. defense of ...


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