Letter of Intent

Companies use LOIS for business negotiation in anticipation of a future agreement. Prior to an official deal, they can take their time affirming to the terms satisfactory to all. There are several types of business LOIS. Most commonly, it is used to signal an intention to purchase a real property, a business, a vehicle, and the like. You can even use a LOI to show interest in working for a particular company. Students can use a Letter of Intent to formally accept a scholarship offer and student-athletes would do the same to show a commitment to accept a sports scholarship offer from a university – where top-ranked high school athletes in the major sports often make the news after signing a LOI.

Although the LOI is not a requirement, it can give both parties confidence that this is a serious deal in the works, where a LOI can be used as a guideline for the agreement that is to happen in the future. In the meantime, you can inspect the LOI for any terms that you might want to change or negotiate before arriving at the definitive agreement. Banks might also demand to see a LOI before authorizing to finance the business deal made.

LOIS do not have to be notarized. Doing so will not add any weight to the document, which is technically not enforceable to begin with, so it could only be a waste of time and money.

As mentioned, LOIs are not legally binding. Any company or person party to the LOI can back out of the deal being negotiated at any time and there is no recourse to all other parties involved. The LOI is simply not designed to be used in this way.

A Letter of Intent is a show of good faith and nothing more than that. It serves as a roadmap leading to the parties involved entering into a formal agreement, assuming that everything goes to plan.