Letter of Intent (LOI) Template

A letter of intent template is a reusable document that outlines the main terms two parties have agreed to before they sign a final contract. LOIs are common in business acquisitions, commercial leases, partnerships and large purchases. Most terms in an LOI are non-binding, but certain provisions, such as confidentiality and exclusivity, are often binding.

This guide explains when to use an LOI, which terms should be binding, a copy-ready outline and how to send LOIs for e-signature.

What is a letter of intent?

A letter of intent (LOI), sometimes called a term sheet, memorandum of understanding or heads of agreement, records the key terms of a proposed deal. It shows both parties are serious and gives lawyers a framework for drafting the definitive agreement.

Common uses:

• Business acquisitions: price, structure, due diligence and timeline.
• Commercial real estate leases: rent, term, tenant improvements and options.
• Joint ventures and partnerships: roles, contributions and ownership.
• Large procurement deals: pricing, volume and key terms before the master agreement.
• Investments: often handled through a term sheet.

Binding vs non-binding terms

The most important drafting question is which terms are binding. A well-drafted LOI states this explicitly.

If an LOI does not clearly say which terms are binding, courts may find that the parties intended to be bound by more than they expected. Clear language prevents that.

What to include in a letter of intent template

1. Parties. Legal names of both parties.
2. Background. A short description of the proposed transaction.
3. Key terms. Price, payment structure, assets or premises, term and conditions.
4. Due diligence. Scope, access and timeline.
5. Definitive agreement. Statement that the parties intend to negotiate a final agreement.
6. Conditions. Financing, approvals, inspections or third-party consents.
7. Exclusivity. Period during which the seller or landlord will not negotiate with others.
8. Confidentiality. Protection of shared information, or reference to an existing NDA.
9. Costs. Each party pays its own expenses.
10. Binding and non-binding provisions. Clear statement of which sections bind the parties.
11. Expiration. Date the LOI terminates if no definitive agreement is signed.
12. Governing law and signatures.

Letter of intent template outline

[Date]

Re: Letter of Intent regarding [proposed transaction]

This letter sets out the principal terms on which [Party A] proposes to [acquire / lease / partner with] [Party B].

1. Transaction: [Description].
2. Price and payment: [Amount and structure, for example cash at closing plus an earn-out].
3. Due diligence: [Party A] will complete due diligence within [45] days. [Party B] will provide reasonable access to records and personnel.
4. Definitive agreement: The parties will negotiate in good faith toward a definitive agreement.
5. Conditions: Closing is subject to [financing, board approval, satisfactory diligence].
6. Exclusivity: For [60] days, [Party B] will not solicit or negotiate with other parties.
7. Confidentiality: The parties’ existing NDA dated [date] applies.
8. Costs: Each party pays its own costs.
9. Binding effect: Only Sections 6, 7, 8, 9 and 10 are binding. All other sections are non-binding expressions of intent.
10. Termination: This letter expires on [date] unless extended in writing.

Signatures: [Party A], [Party B], with names, titles and dates.

Common LOI mistakes

• Unclear binding language, the most common cause of LOI disputes.
• Overly detailed LOIs that become mini contracts and slow the deal.
• Long exclusivity periods without milestones.
• No expiration date.
• Inconsistent terms between the LOI and the final agreement.

Speed up LOIs with document automation

Deal teams send many LOIs with similar structures. Automation helps:

1. Capture deal terms in a form or pull them from the CRM.
2. Generate the LOI from an approved template with conditional sections for deal type.
3. Route for internal approval by legal or the deal lead.
4. Send for e-signature to the other party.
5. Track status and expiration dates.
6. Use the same data to generate the definitive agreement later.

How Noca helps

Noca generates LOIs from your templates and deal data, routes them for approval, collects e-signatures and reuses the same data to draft the final agreement. Learn more about Noca contract automation.

This article is for general information and is not legal advice.

Related guides

• Sales Contract Template
• Residential Lease Agreement Template

Frequently Asked Questions

What is a letter of intent?

A letter of intent is a document that outlines the key terms of a proposed deal before the parties sign a final, definitive agreement. It is common in business acquisitions, commercial leases, partnerships and large purchases, and usually includes both non-binding commercial terms and certain binding provisions.

Is a letter of intent legally binding?

Most LOIs are mostly non-binding, but specific provisions such as confidentiality, exclusivity, costs and governing law are often intended to be binding. The LOI should clearly state which sections are binding. Without clear language, a court may interpret more of it as binding than intended.

What is the difference between an LOI and a contract?

An LOI outlines the main terms the parties intend to agree on and is mostly non-binding. A contract, or definitive agreement, is a detailed, binding document that sets out all rights and obligations. The LOI usually comes first and guides the drafting of the contract.

What should be included in a letter of intent?

An LOI should include the parties, background, key commercial terms, due diligence, intent to sign a definitive agreement, conditions, exclusivity, confidentiality, cost allocation, a clear statement of which provisions are binding, an expiration date, governing law and signatures from both parties.

How long is a letter of intent valid?

An LOI is valid for the period stated in the document, often 30 to 90 days, depending on the deal. It typically ends when the parties sign the definitive agreement, when the stated expiration date passes or when either party terminates it under its terms.

Can a letter of intent be signed electronically?

Yes. Letters of intent can be signed electronically in the US under the ESIGN Act and state UETA laws. E-signatures help deal teams move quickly, especially when parties are in different locations, and provide an audit trail of who signed and when.