Contract Glossary
Letter of Intent
Definition
A document outlining the preliminary terms of a deal before a formal contract is drafted. Letters of intent (LOIs) are mostly non-binding, they signal serious interest and set the framework for negotiations. Some provisions, like confidentiality and exclusivity, are often made binding.
In Practice
You'll use an LOI when negotiating a business acquisition, major partnership, or real estate deal. It sets the key terms (price, timeline, conditions) before lawyers spend weeks drafting the full agreement. Make sure your LOI clearly states which provisions are binding and which aren't, otherwise you might accidentally lock yourself into a deal.
Common in these contract types
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