Letter Of Intent

A letter of intent (LOI) is a formal document that indicates a business transaction is about to take place. It outlines the basic terms of the deal and provides an understanding between both parties moving forward.

You may see a letter of intent referred to as a ‘term sheet’ or a ‘memorandum of understanding (MOU).’ These types of documents are sometimes used interchangeably, but they technically have different purposes. A term sheet is more like an outline—it covers the major points that need to be hashed out in the final contract. An MOU is even more general and is simply a written agreement that two parties will do business together.

In short, a letter of intent definition is: A type of formal business letter used to start negotiating a business deal, outlining the main points that need to be agreed upon by both parties before progressing further.