Letter of Intent

A letter of intent records proposed deal terms and negotiation process before a definitive agreement, distinguishing nonbinding economics from any binding exclusivity, confidentiality, or expense terms.

A useful document turns the parties' actual arrangement into measurable duties, approvals, timing, remedies, and a reliable execution record. Its terms should be reconciled to the transaction rather than copied from an unrelated form.

• A buyer outlines terms to acquire a business
• A landlord and tenant outline lease economics
• Investors reserve diligence time before definitive documents

The document name alone does not determine the right structure. Consider a different instrument or qualified legal review when any of these conditions applies:

• Not a substitute for a final sale, lease, or financing agreement
• Not appropriate when parties have not agreed whether any section is binding

Record exact facts before clauses are written. Names, authority, dates, amounts, defined terms, dependencies, and incorporated materials should be verifiable and consistent.

• Parties and proposed transaction
• Price, structure, conditions, and target timetable
• Binding versus nonbinding sections
• Diligence, exclusivity, confidentiality, and expenses

These decisions shape the allocation of responsibility and should not be left for boilerplate to decide:

• Which provisions are binding now
• Whether exclusivity has a fixed end date
• What diligence conditions precede closing
• Who bears negotiation costs if no deal closes

• Proposed economic and operational terms
• Definitive-agreement and approval conditions
• Binding-status statement by section
• Exclusivity, confidentiality, and publicity
• Expiry, expenses, governing law, and signatures

Every provision should use the same parties, dates, standards, defined terms, and document hierarchy. A clause that is reasonable by itself can still create a conflict when it is not reconciled with payment, default, termination, or another exhibit.

1. 01Describe the intended result and the relationship in plain language.
2. 02Confirm parties, authority, governing jurisdiction, dates, money, property, services, and approvals.
3. 03Resolve the key decisions and identify every schedule, exhibit, disclosure, consent, or filing.
4. 04Draft the provisions as one consistent system, then review the complete execution set before signature.

A blanket 'nonbinding' header may conflict with detailed performance language or expressly binding process clauses. Conduct can also create disputes about whether parties agreed to negotiate in good faith.

The main agreement may establish the framework while schedules, exhibits, disclosures, consents, or operational records supply transaction-specific details.

• Transaction summary and term model
• Diligence request list
• Existing NDA or exclusivity agreement

Each incorporated document should be identified precisely, use the same names and effective date, and follow a stated order of precedence if terms conflict.

Label each section's status, set precise process deadlines, avoid operational commencement, and preserve drafts and approvals until definitive signing.

• Confirm legal names, roles, capacity, addresses, and signing authority
• Reconcile dates, amounts, definitions, cross-references, schedules, and exhibits
• Confirm that duties, deadlines, approvals, acceptance standards, and payment triggers are measurable
• Check that default, termination, remedies, and surviving obligations work together
• Complete jurisdiction-specific forms, notices, witnesses, notarization, filings, or professional review when applicable
• Deliver and preserve the complete signed package with its incorporated documents

These sources provide federal, state-resource, regulatory, or institutional context. They do not replace checking the law and required forms applicable to the parties, transaction, and governing jurisdiction.

1. Source 1

   D.C. Code § 28:1-304 — Obligation of good faith

   D.C. Council. Enacted good-faith obligation in commercial-code performance and enforcement.

2. Source 2

   15 U.S.C. § 7001 — Validity of electronic records and signatures

   U.S. House Office of the Law Revision Counsel. Federal statute governing electronic signatures and records in covered transactions.

3. Source 3

   Dealings with Competitors

   Federal Trade Commission. Current FTC guidance on competition risks when rivals collaborate, share information, or restrict independent conduct.