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A letter of intent is a specific legal document that someone uses in order to declare their intent to do something, such as make a purchase, apply for a job or education program, or to clarify points in a major business transaction. Letters of intent are written in a specific letter format, and they only need to be signed by one party. Since it is not a contract, it is not usually legally binding.
Using a letter of intent is important to demonstrate knowledge about the subject the transaction will be performed in. It also shows a respectful interest in the other party and dealing with them in a professional manner.
This letter is a useful way to state your intent without entering into an agreement yet. Include as much information as possible in your letter of intent in order to provide the recipient with the most details. This will help you to understand the transaction being performed and what the outcome will be if you proceed.
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When it comes to small businesses and entrepreneurs, a letter of intent template can allow the parties to define their own plans and legal relationships without the exorbitant costs of corporate attorneys or business lawyers. A letter of intent, or LOI, is exactly what it sounds like. In a letter of intent, two or more people outline an agreement or plan of action before that agreement if legally finalized.
Letters of Intent are not as binding as the final agreements, but constitute “good faith” amongst the parties to work together on whatever venture is outlined. Letters of Intent are intended to provide security for those involved so they can move forward to finalize the joint venture. By using a free letter of intent template online, those involved can create a LOI without incurring unnecessary legal costs.
What type of situations would call for a free letter of intent template to be used? Letters of Intent act as an official declaration that the parties involved are currently in negotiations for some larger purpose. This can include business mergers, joint ventures, some graduate school applications, real estate transactions and more. Mutual fund shareholders may occasionally use a letter of intent template to outline their intent to invest certain amounts of money at specified times. A shareholder might complete the letter of intent template in exchange for reduced charges in relation to the investment.
It is important to note that, in nearly all cases, a letter of intent is not legally binding. Letters of intent are exactly that. They cannot be used to force a party to complete a negotiation or move forward with a venture; quite simply, they are used only to officially declare that a party currently intends to do something. A letter of intent is often required before businesses spend too much time, effort or money exploring and ironing out the details of a contract. Often, negotiations require some manpower or capital expenditure. This can involve surveying, property inspections, researching legal issues and much more. A letter of intent may make the other party feel more comfortable moving forward with these negotiation preparations .
There are some exceptions to this, which is why it’s important to find a professional, free letter of intent template rather than crafting your own. A letter of intent might become something that can be enforced if it is too restrictive. In other words, if the letter of intent starts specifying actions and promising completion of certain terms, it might become legally binding. In that case, it might begin to resemble a final contract or document, and become binding as such. Using a standard letter of intent template can provide the assurance that both parties need during negotiations, while avoiding any legally binding encumbrances.