Letter of Intent FAQ - United States

From LawDepot Law Library

Jump to: navigation, search

A Letter of Intent is a non-binding document that outlines a proposed understanding between two or more parties who wish to finalize the details for a future transaction. It is also known as a memorandum of agreement, memorandum of understanding, pre-contract, or agreement to agree.

Back to Letter of Intent

What is a Letter of Intent used for?

What is a Letter of Intent used for?

A Letter of Intent helps to formalize issues relating to the intended transaction. It allows the parties to clearly state and compare their expectations for any future agreement. The Letter of Intent can also be used in discussions with bankers and investors as evidence of serious negotiation.

If a Letter of Intent is not binding then what is it good for?

Parties should remember that a Letter of Intent is NOT binding. The purpose of a Letter of Intent is only to help finalize the details of a future agreement. The parties should not rely on the Letter of Intent as binding on the other party as it is only a tool to facilitate further discussion. The Letter of Intent can also be used in discussions with bankers and investors as evidence of serious negotiation.


Back to Letter of Intent