What is a Letter of Intent?

A letter of intent is a document or agreement between two or more parties. It basically outlines the details of events that could take place if a partnership or joint venture is formed. The language in a letter of intent is formatted in such a way that it is not legally binding to either party in involved. This is not a contract. You see letters of intent used quite a bit by students when they are thinking about attending a particular college. They will send a letter of intent which informs that school that they will be attending during a particular school year.

Sometimes during the process a student may decide to change his mind and attend another program. This happens all the time. Perhaps his original school of choice was placed on probation for recruiting violations. If the student thinks this will hinder the schools ability to remain competitive in future he may decide to attend another school.

It is always good to have a letter of intent because it clarifies all of the terms and agreements of a specific task pertaining to all parties involved. When you have a letter of intent everything is spelled out completely which leaves no room for misinterpretations or ambiguities. If you are entering into an agreement and everything is not spelled out completely then you are left to make assumptions. You can draw the wrong conclusion when there is only a verbal agreement.

A letter of intent will normally state somewhere in the body of the letter that the agreement is not legally binding. It gives each party involved a chance to look over the material and see if this future business arrangement is going to be conducive to them achieving their goals and objectives. If one of the parties has questions or objections to the contents of the letter they can come together and work out the major details and get it all resolved.

When everything is finalized and the parties agree on the language they can then draw up a legally binding contract for both parties to view and sign, if they are sure that a business deal is in the interest of both parties.

When you have a buyer and a seller getting ready to do business the letter of intent should have as much detail as possible. The price, terms, costs, deliver location, and any other intricate detail should be outlined so that the buyer and seller will have an understanding of what is to be expected in the future should an agreement take place.

Source: http://answers.yahoo.com/question/index?qid=20070427085059AAf4gwB

Source: http://answers.yahoo.com/question/index?qid=20081025061010AAbK0zt