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.
What is the importance of using a letter of intent?
Unlike contracts and agreements, letters of intent are nonbinding which allows the parties to freely revise the terms set. Using a letter of intent is important because it ensures that both parties are on the same page before fully committing to the terms.
How are letters of intent used in businesses?
Letters of intent in businesses communicate how much the buyer will have to pay the seller for the purchased goods. Aside from that, the letter also specifies the condition of the courier upon picking up the item. Lastly, LOIs serve as a valid document to prove that the transaction occurred.
Do letters of intent expire? If yes, then how long?
Yes, LOIs can expire. In most cases, the validity of the letter can be between 72 and 96 hours. Or in some cases, its validity can reach up to two weeks.
What is the difference between an LOI and LOA?
A letter of intent is a document used to elaborate on preliminary terms of an agreement between two parties. A letter of agreement, on the other hand, is a document used to outline conditions between an employer and employee.
What information should an LOI contain?
- A summary introduction.
- The reason for writing the letter.
- Accomplishments or achievements.
- Closing remarks.
- Name and signature of the sender.