Sample Letter of Intent

If you need help composing one, looking at a sample letter of intent can help you understand which elements should be covered in this document. It is commonly used in business situations where two or more parties want to put something in writing when one of them is interested in buying a business from the other.

Put it in Writing

A letter of intent is used before a formal agreement is signed. Unlike a legal contract, the entire contents are not legally binding. However, some of the provisions contained in a letter of intent may be.

If the letter of intent contains clauses that bar the parties from disclosing the terms of the proposed purchase and sale, these are considered binding on the parties. Other terms that are binding on the parties would include ones requiring them to bargain in good faith.

Here are some examples of situations where a letter of intent may be used in business and other situations:

• Two or more parties are interested in forming a joint venture
• Two businesses intend to negotiate the terms of a merger
• A party wants to buy a property not listed on the Multiple Listing Service (MLS) uses a letter of intent to indicate their intention to buy it
• A business consultant may use a letter of intent to outline the types of services they offer, payment terms, and the consultant's contact information

A letter of intent is set up in the same way as a standard business letter. It includes the following basic elements:

• Recipient's address
• Date
• Salutation

When you are looking at a sample letter of intent, make note of the way it is set up and the kind of information it contains. The body of the letter should indicate that the parties have agreed to take some action together. The language is less formal than what is used in a formal agreement, but the letter of intent can outline the main portions that will be written into a binding contract.

If the letter of intent is one to purchase a business, the person preparing it will likely set out the fact that they are going to do so in the text. The purchase price and whether it includes a facility, equipment, inventory or other items will be listed. The body of the letter may also set out a time frame for completion of the sale.

The letter is finished with a complementary close in the same fashion as other business letters. Be sure to sign your name to the letter.

If you are looking for a sample letter of intent, there are a number of web sites offering this information. Here are a few examples:

• TechRepublic.com has a sample letter of intent for people who do consulting work. The site also has a sample contract template for individuals who work as independent consultants.
• AllBusiness.com has an example of a letter of intent with blanks for the buyer and seller's names, the amount being paid, and the closing date for the purchase.
• The sample letter on the Docstoc.com web site can be used in situations where an institution is offering to act as a sponsor.

A letter of intent is not meant to replace a formal agreement. It does provide a foundation for negotiating a detailed contract for the parties. Each one understands what they want to achieve together and can go on to work out all the terms.

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