What Is a Letter of Intent?

A letter of intent is a formal document that puts into writing details discussed and agreed between two or more parties. Depending on its purpose, this letter serves as an introduction before a prospect commits to a partnership or job agreement with the other entity.

How to Create a Letter of Intent

According to the Swanson Law Firm, LOIs are important because they allow the different parties to negotiate terms clearly. To ensure your document is following the standard and professional format, use the guidelines below as reference.

1. Gather Details about the Other Party

Since Letter of Intent is about making deals between you and another party, it’s important that you start the process by gathering details about them. By doing so, you’re giving the impression that you actually did your research before reaching out to them. Also, this will help you in knowing what to write in the letter.

2. Write a Draft of the Letter

After doing your research about the other party, start writing an initial version of your letter. To save you time, you can write your draft letter by hand if you want. But if you’re not ready to write a simple letter yet, you can focus on making a list of important keywords instead.

3. Choose a Document Processor You’re Comfortable With

There are so many programs or word processing tools that you can use to make your LOI. You have MS Word, Apple Pages, and Google Docs to choose from. However, save yourself the hassle by choosing one that you're most comfortable with.

4. Use Simple Terms as Much as Possible

How can you be in agreement with the other party if they can't even understand what you're saying? You can always explain it to them but this will take up some time. Instead, make the wiser choice of using simple terms in your printable letter. This way, you and the other party can easily agree to the terms set.

General FAQs

  • What is the importance of using a letter of intent?

  • How are letters of intent used in businesses?

  • Do letters of intent expire? If yes, then how long?

  • What is the difference between an LOI and LOA?

  • What information should an LOI contain?

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