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  • Writer's pictureRaphael Collazo

What is a Letter of Intent?

A letter of intent (LOI) is a document that outlines the proposed terms of an agreement between two parties. It is not a legally binding agreement, but rather a statement of the parties' intention to enter into a formal contract at a later date.

Letters of intent are often used in business transactions, such as real estate deals, mergers and acquisitions, and joint ventures. They can serve a variety of purposes, including outlining the key terms of a proposed deal, identifying any areas of disagreement, and establishing a timeline for negotiations.

A letter of intent typically includes a brief summary of the proposed terms, such as the purchase price, the assets or property being transferred, and any contingencies that must be met before the deal can be finalized. It may also include a non-binding clause, which indicates that the parties are not legally obligated to follow through with the deal unless and until a formal contract is signed.

Letters of intent are not the same as binding agreements or contracts, and they do not create any legal obligations for the parties. However, they can be useful for helping the parties to clarify their intentions and to reach an understanding of the key terms of a proposed deal before entering into a more formal agreement.

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