Navigating the early stages of a business deal or partnership can feel uncertain, but a Letter of Intent (LOI) can bring clarity and confidence to the process.

LOI is a document that captures the initial understanding between two parties before they commit to a formal agreement. It’s not legally binding, but it signals serious intent and helps outline key terms.

With Bind’s contract generation tool, you can create a professional LOI in minutes by answering a few straightforward questions. Plus, you can e-sign, request signatures, and share it—all in one place. Let’s explore what an LOI is, why it’s useful, and how you can create one effortlessly.

What is a Letter of Intent?

A Letter of Intent (LOI) is a document that captures the initial understanding between two parties before they commit to a formal agreement. It’s commonly used in scenarios like business deals, partnerships, or property transactions to outline key points and show mutual interest. While it’s not a legally binding contract, it sets the stage for negotiations and helps both sides align expectations.

Why Use a Letter of Intent?

An LOI brings practical benefits to the table:

• Clarifies the main terms early, reducing the chance of miscommunication.
• Signals serious intent, fostering trust between parties.
• Saves time by focusing discussions on what matters most.

Essentially, it’s a way to test the waters before diving into a full contract, ensuring everyone’s on board with the direction.

What Goes Into an LOI?

A solid LOI doesn’t need to be complicated, but it should cover the essentials:

• Parties Involved: Name who’s signing and their roles.
• Purpose: State what the LOI is about (e.g., a partnership or sale).
• Key Terms: Highlight the big points—scope, timelines, or financials—without locking in every detail.
• Non-Binding Note: Make it clear this isn’t a final contract, unless specific parts (like confidentiality) are meant to hold weight.
• Signatures: Both sides sign to show they’re in agreement so far.
  This keeps it focused and functional, leaving room for refinement later.

What to Watch Out For

An LOI has its limits. It’s not a legal commitment, so don’t treat it as one—neither party is locked in until the final contract is signed. That said, clauses like confidentiality can carry legal force if worded that way, so be precise. The goal is to use it as a stepping stone, not a substitute for the real deal.

How to Write One

Drafting an LOI is simpler than it sounds:

1. Start with a clear opening—say who you are and why you’re writing.
2. List the key terms in plain language.
3. Add any special conditions, like keeping things private.
4. Note that it’s not final or binding (unless parts are).
5. Review it for clarity, then get both sides to sign.
   If you want a head start, here’s a no-frills template:

Letter of Intent (LOI) - Template

[Date]
[Recipient’s Name]
[Recipient’s Address]

Dear [Recipient’s Name],

This Letter of Intent outlines a preliminary agreement between [Your Name/Company] and [Recipient’s Name/Company] regarding [purpose, e.g., exploring a business partnership]. Below are the key points we’ve discussed:

• [Term 1, e.g., Purpose or scope]
• [Term 2, e.g., Timeline or next steps]
• [Term 3, e.g., Financial outline, if applicable]

Both parties agree to keep this matter confidential. This document is not legally binding, except for the confidentiality provision, and serves as a basis for further talks.

Please sign below if this reflects our understanding.

Regards,
[Your Name]
[Your Title/Company]

Agreed:
[Recipient’s Signature]
[Recipient’s Name]
[Recipient’s Title/Company]

Keep It Simple with Bind

If writing isn’t your thing—or you just want it done faster—tools like Bind can help. Answer a few questions, and it generates a clean, tailored LOI for you. You can sign it electronically, send it off, and store it, all without the hassle of back-and-forth drafts. It’s a practical way to get it right without overcomplicating things.