A letter of intent is a broad agreement that acts as a basis for a further formal binding agreement.
It might concern different relations between parties. For example, if the parties create a letter of intent before entering into a purchase agreement, the document helps them establish the terms of the contract before a more advanced version of the purchase agreement is created. If a letter of intent concerns school application or job employment, it will be aimed at enhancing the applicant’s chances of getting enrolled or hired. There are also other types of letters.
In the majority of cases, such a document is non-binding, but if the parties don’t set it explicitly in the letter of intent, the court might consider it a legally binding contract that will be enforceable for both parties.
Usually, such a document sets a time period after which it loses its force if the parties sign a legally binding contract till that time.
Read further to learn more about this type of document and where you can find a free letter of intent template.
Letters of intent vary based on the relations they help establish between parties.
Such a letter is a financial document that an individual, the investor, makes to inform another party, the company, about the monetary contribution they are about to make. Such a letter of intent might imply making a financial investment in order to get partial ownership in a business, become a partner, or acquire the real estate of a company.
A letter should contain the information on the sum to be invested and the interest in the company the investing party will get.
A letter of intent can also be used between parties when a buyer is aiming at purchasing products from a seller before they craft a formal purchase agreement. The letter might include a specified amount of time the seller will have to decide whether they accept or refuse the buyer’s offer. The product in question might be real estate, stock, part of a business, etc. The document should describe the type of asset that is about to be bought, its amount, and specifics. Other details of the deal are usually described in an advanced purchase agreement.
A letter of intent might also apply to conflict resolution between parties and can be used by a potential plaintiff to notify the prospective defendant about their intent to file against them in a court. In such a case, the document should tell what action of the defendant is considered an unlawful act and set a certain time period that can be used to solve the conflict before starting the court proceeding.
In such a letter, a school applicant tries to persuade the committee that they deserve to get enrolled in the school or college. The letter should tell about their strengths and skills that might contribute to the educational community. It should also reveal their academic achievements as well as extracurricular accomplishments. It generally goes along with an application for enrollment and sets the tone for all of the documents submitted by an applicant.
This document is aimed at increasing an applicant’s chances of being hired by showing their skills and work experience that make them a perfect fit for the position they are applying for. It usually goes with a cover letter but those two documents slightly differ. A letter of intent is a letter that is focused on the considered position and concentrates rather on the hiring company than on the position. Skills required for the job are described more generally here than in a cover letter.
This is a document that outlines the wish of the tenant to terminate the rental agreement. The letter should be sent in a period set by the state which is most often a period of 30 days. The document should be sent via certified mail with a return receipt. The proof of service will let the tenant prove that the letter was delivered to the landlord in case they decide to ignore the tenant’s request.
Whether a letter of intent is binding or not will depend on the agreement between parties. If they decide to make the document binding, it means that if there is a conflict between the parties and they want to bring a case to the court, the latter will deem the document enforceable and will help resolve the conflict.
If a letter of intent has a clause stating that it is non-binding, it is an unenforceable contract then. It means that it cannot be contested in the court by any of the parties.
Quite often, a letter of intent is a document implying that the parties desire to record some preliminary discussions in it to make sure that they are both on the same page. By doing this, they show that they don’t want to commit to a binding contract yet. This is how parties might consciously choose to make a letter of intent nonbinding.
A letter of intent requires less effort than an actual binding contract, but parties still have to follow certain steps to create an enforceable document establishing a certain type of relations between parties.
The first step in creating a letter of intent is deciding whether parties want to make a binding or a non-binding agreement. Then, they should determine the main details of the document, including the product or service that is about to be purchased/provided, the sum that should be paid for it, when the payment should be made, etc.
When parties are sure they have talked out all of the important details of the future deal, they have all the information to write a letter of intent.
It would be smart to find a free letter of intent template before drafting a customized document that would describe the specifics of your relations with the other party. You can find a free letter of intent on our website and use it to create either binding or non-binding document. Please note that if you are going to create a binding document, the terms should be the same as in a future advanced contract. If you decide to craft a non-binding letter of intent, it would be enough to include only the most important terms such as an item/service and the purchase price.
Parties can complete a transaction in 2 ways: by finalizing it with a letter of intent or creating a binding purchase agreement that would replace the preceding document.
Purchase letters of intent are aimed at fixing the terms of a future purchase. Every sample letter of intent for purchase will most likely have the same structure.
In the first paragraph, the document is identified as a letter of intent and details the object that will be transferred in the future. If parties agree to sell real estate, it should include its address. If it’s a business, it should include its name along with the assets that will be sold along with the business.
The next paragraph should give more details on the property or item that will be transferred – name, quantity, associated debts, if any, etc.
Next, the payment method should be specified. The section should state whether the item will be purchased using cash, credit card, or other means, whether the payment will be divided into parts, when the sums will be delivered to the seller, etc.
This section should state whether the buyer becomes the single one who is expecting to complete the deal, or the seller might be looking for other buyers too.
The last paragraph of this letter of the intent template should explicitly tell that document does not contain the main terms of the deal, and they will be specified in more detail in the actual purchase agreement.
The document should be ended with the signatures of the seller and the buyer.
In case the parties are the investor and the owner of the investment, they should create a letter of intent including the next information:
This is a relatively simple document that includes:
In such a letter, you need to write:
If you need a letter of intent template devised specifically for your needs, use our online document builder. It will help you create a document that will cover all the details of your business deal!