Free Letter of Intent Template

A letter of intent is a written document that outlines the main terms parties plan to negotiate and include in a final agreement. It signals serious interest, sets expectations, and can reduce misunderstandings while you work through details like due diligence, approvals, and timelines.

Many LOIs are designed to be non-binding on the final deal, but they can still include specific binding clauses, depending on how they’re written.

An LOI typically focuses on the proposed terms of a specific deal and the path toward a final contract. A memorandum of understanding (MOU) usually documents a broader understanding about working together, even if the final details still need to be negotiated.

However, the label matters less than the wording. In addition, both documents can include a mix of non-binding language and binding clauses, depending on intent and drafting.

Use an LOI when you want to confirm direction before you invest time in a full contract. This is especially helpful when the deal depends on conditions, approvals, or due diligence.

• Buying or selling a business: Outline the purchase structure, timeline, and conditions before a final agreement. You may later move to a business purchase agreement.
• Buying or selling major assets: Summarize what’s being transferred, price, and payment timing, then follow with a more detailed agreement or supporting documents like a bill of sale.
• Real estate negotiations: Confirm price, contingencies, and deadlines before drafting a formal real estate purchase agreement.
• Partnership planning: Align on contributions, responsibilities, and profit sharing before a partnership agreement.
• Lease negotiations: Clarify rent, term length, and responsibilities before signing a lease agreement.
• Job or contractor discussions: Confirm role details and key expectations before an employment contract or independent contractor agreement.

Most letters of intent are written to be non-binding on the obligation to close the deal. However, certain sections can be binding if the parties clearly state that intent.

Common binding clauses in an LOI include:

• Confidentiality: Requires both sides to protect shared information.
• Exclusivity (no-shop): Limits negotiations with other parties for a set period.
• Non-solicitation: Helps prevent poaching employees, clients, or customers during talks.
• Governing law and dispute process: States which laws apply and how disputes will be handled.

Courts look closely at wording, structure, and conduct, so clarity matters.

Tip: If confidentiality is your top priority, keep your LOI focused on the deal outline, and place privacy terms in a separate non-disclosure agreement.

A clear LOI covers the terms that help both sides decide whether to move forward. Depending on the situation, include:

• The parties: Legal names and contact details.
• The purpose: A short summary of what you’re proposing.
• The key terms: Pricing, payment structure, and what’s being exchanged.
• Conditions: Financing, inspection, approvals, due diligence, or other requirements.
• Timeline: Target dates for diligence, negotiation, and signing the final agreement.
• Expiration and termination: When the LOI ends and how either side can walk away.
• Binding clauses: Clearly labeled confidentiality, exclusivity, and related terms, if you want them enforceable.

Writing an LOI is easier when you break it into steps. Document Genius guides you through each section, so you can stay focused on the terms that matter.

1. Add the Basic Information

Start with the date, contact information, and a clear subject line. Then identify the parties involved, using consistent labels throughout the document.

2. Describe the Proposed Deal or Relationship

Explain what you want to happen, and include the headline terms you already agree on. For example, you might include the proposed purchase price, compensation, or scope of work.

3. List Conditions and Due Diligence Items

Include any requirements that must be met before moving to a final contract. This could include financing approval, inspections, document review, or internal sign-off.

4. Clarify What Is Binding and What Is Not

State whether the LOI is non-binding overall, and then clearly label any binding sections. This is where many disputes start, so direct language helps.

5. Add an End Date and Termination Terms

Set an expiration date, or list events that end the LOI, such as signing a definitive agreement or ending negotiations in writing.

6. Sign and Move to the Next Document

After signing, use the LOI as your roadmap. Depending on your situation, the next step could be a business purchase agreement, a lease agreement, or an employment contract.