letter of intent (LOI)

  

Definition

Interim agreement that summarizes the main points of a proposed deal, or confirms that a certain course of action is going to be taken. Normally, it does not constitute a definitive contract but signifies a genuine interest in reaching the final agreement subject to due diligence, additional information, or fulfillment of certain conditions. The language used in writing a letter of intent is of vital importance, and determines whether it is only an expression of intent or an enforceable undertaking. Also called 'memorandum of understanding' or 'precontract'.

Use this term in a sentence

  • You can sign a letter of intent if you wish to purchase a product at a later date but can't do it at the current time.

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  • The letter of intent was thoroughly scanned and examined by the team's lawyers to ensure that all terms previously agreed upon were in fact present.

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  • Signing a letter of intent will let someone know you are very serious about the offer you are making and they can rely on you.

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