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A letter of intent to purchase is a written summary of the terms on which a buyer expects to buy something, sent before the formal contract is drafted. It identifies the item, the price, and the steps still to come.
It suits transactions large enough that a handshake is not sufficient but not yet ready for a full agreement. Equipment, inventory, vehicles, machinery, intellectual property, and mixed asset packages all commonly start this way.
The letter does not transfer ownership. It records what both sides expect, so a seller can take the item off the market and a buyer can commit to inspection or financing costs with some confidence.
Written early, it also surfaces disagreement cheaply. Discovering that the parties meant different things about what is included costs far less at this stage than after a contract has been drafted.
Send a letter of intent to purchase when the deal is agreed in outline but several things still need to happen. Typical situations include:
Routine purchases handled by an invoice or a purchase order do not need one. The letter earns its place when the item is expensive, the description is complicated, or the gap between agreeing and completing is measured in weeks.
A letter of intent to purchase should fit on one page and describe the item precisely enough that nobody could mistake what is being bought.
Name the buyer and the seller in full, including the legal entities that will sign.
Identify the item with whatever detail makes it unambiguous: serial numbers, model, quantity, condition, location.
Spell out accessories, spares, documentation, warranties, and anything staying with the seller.
State the price, any deposit, and when the balance falls due.
Give the buyer a defined window to inspect, and say what happens if the item is not as described.
List financing, third-party consents, permits, and anything else that must land first.
Say who arranges transport, who pays, and when responsibility passes.
Add an expiry date and signature lines for both sides.
Most disputes over a purchase come down to description, and the letter is where you fix it.
Use identifiers rather than adjectives. A serial number, a VIN, a model and year, a quantity and unit, or a schedule attached to the letter all beat calling something the blue machine in the second bay.
Say what condition means. Sold as seen, in working order, and subject to satisfactory inspection are very different positions, and the letter should make clear which one applies.
List the extras explicitly. Tooling, manuals, software licences, spare parts, and transferable warranties are exactly the things each side assumes are included until they discover otherwise.
Tip: If the purchase covers many items, attach a schedule and refer to it rather than trying to describe everything in the body. A dated, signed list is far easier to rely on later.
A letter of intent to purchase takes about twenty minutes. Document Genius walks you through each section with simple questions.
Open with the date, both parties, and a clear identification of what is being bought.
Give the figure, any deposit, and when the balance is payable.
Say how long the buyer has and what triggers a withdrawal.
Financing, consents, permits, and anything else outstanding.
Who moves it, who pays, and when risk passes.
Date it, sign it, and keep a copy. Start yours now and have it ready today.
Two questions come up on almost every purchase letter, and both deserve a clear answer in the document.
Say whether the letter binds. Most are written so that neither side must complete, with confidentiality and exclusivity as the usual exceptions. State which sections are intended to be enforceable rather than leaving a reader to guess.
Be precise about any deposit. Whether it is refundable, what happens if inspection fails, and who holds it in the meantime should all appear in writing. A deposit described loosely is the single most common source of argument.
Afterwards, expect a proper agreement. The letter sets the shape; a sale agreement, bill of sale, or assignment does the actual work of transferring ownership.
Whether a document like this creates enforceable obligations depends on its wording and on where the parties are. For anything substantial, have a lawyer review the letter before you sign it and draft the agreement that follows.
If a letter of intent lands on your side of the table, read it for what it commits you to rather than what it offers.
Check the exclusivity period. Agreeing to stop marketing the item is a real cost, particularly if the buyer’s financing is uncertain, so keep any no-shop window short and tie it to the buyer meeting their own deadlines.
Look at how the inspection clause is drafted. A buyer entitled to withdraw for any reason at all is very different from one who may withdraw if the item is not as described, and the difference decides who carries the risk during the window.
Confirm the deposit arrangements suit you. Who holds it, in what account, and on what terms it is released all matter more than the amount.
Respond in writing rather than verbally. Counter-signing with amendments, or replying with a marked-up version, keeps a clear record of what was actually agreed between you.
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