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Letter of Intent (LOI): Free Template (DOCX) + Format & Examples
Greg Mitchell | Legal consultant at AI Lawyer
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A promising deal doesn’t always immediately turn into a final contract. Before parties spend time and money on detailed legal documents, they often need a simple way to confirm that they are working toward the same basic deal.
A Letter of Intent helps with that. It gives negotiations a clear starting point, outlines the direction of the proposed deal, and helps both parties decide whether it makes sense to move forward.
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LOI vs Term Sheet vs MOU
Before using the Letter of Intent template, it's a good idea to make sure that the LOI is the right document for your situation. Letters of intent, term sheets, and memorandums of understanding are used before the final agreement, but they are not always interchangeable.
A letter of intent is usually well suited when the parties want to outline the direction of the proposed agreement and proceed with work on the final contract. A term sheet is often more compact and focused on key deal terms, especially in investment or financing negotiations. The MOU is often used to describe a broader understanding, cooperation, or common goal between the parties, as shown in the Georgia Tech Memorandum Review.
Document | Best used for | Typical format | When it might be a better choice |
Letter of Intent (LOI) | Business Acquisitions, Real Estate Transactions, Leases, Partnerships, and Other Proposed Deals | A short letter or structured document explaining the basic terms of the transaction | Use an LOI when the parties agree on the general direction of the agreement, but final terms still need to be agreed upon |
Term Sheet | Investment rounds, financing deals, acquisitions, and deals with many economic or structural terms | Concise list or table of key terms | Use a term sheet when the main goal is to summarize the deal economics, rights, obligations, and closing conditions in a highly scannable format |
Memorandum of Understanding (MOU) | Strategic collaborations, institutional relationships, agreements with the public sector or non-profit organizations, and early collaboration frameworks | A document describing roles, goals, responsibilities, and common intentions | Use a Memorandum of Understanding when the parties want to document a broader understanding rather than focusing on one specific transaction |
These labels can overlap in practice. As ACC/WilmerHale points out in its discussion of "non-binding" pre-deal documents to an agreement, legal effect depends less on the title and more on the wording, context, and intent of the parties.
So if your goal is to outline a proposed deal before a final agreement, an LOI is usually the right starting point. If you mainly need a concise list of key deal terms, a term sheet may be a better fit. If you're documenting a broader relationship or collaboration structure, a MOU may be more appropriate.
What Is a Letter of Intent (LOI)?
A letter of intent (LOI) is a preliminary document that outlines the main terms of a proposed deal before the parties sign the final agreement. It is commonly used when both sides are generally aligned but still need to confirm details, complete due diligence, or negotiate final terms, as explained in Investopedia’s overview of letters of intent.
Free Letter of Intent (LOI) Template (DOCX)
If you need a fast starting point, you can download a free letter of intent template (DOCX) and adapt it to your transaction.
The template includes the core LOI structure: party details, a deal overview, key terms, a basic timeline, and a signature section. It should still be tailored to the actual deal, especially if the transaction involves due diligence, exclusivity, confidentiality, financing, or other special conditions.
If you want to move faster, you can also use AI Lawyer to generate a draft based on your scenario and then tailor it to your timeline, deal terms, and negotiation points.
When Do You Need a Letter of Intent?
A letter of intent (LOI) is most useful when the main deal terms are already clear, but the parties are not ready to sign the final agreement yet. At that stage, an LOI helps put the key terms, timeline, and next steps in writing so the negotiation stays organized. This general use of an LOI is also reflected in Investopedia’s overview of letters of intent.
Typical situations where an LOI makes sense include:
Business deals. An LOI is often used when buying or selling a company, entering a partnership, or negotiating a joint venture. In these situations, it helps the parties align on price, structure, due diligence, and timing before the final agreement is drafted. The U.S. Small Business Administration also highlights due diligence as a key part of buying an existing business.
Real estate transactions. A buyer and seller may use an LOI to confirm the price, property scope, inspection period, financing terms, or closing timeline before moving to the purchase agreement.
Commercial leases. An LOI can help the parties lock in the main business terms — such as rent, lease term, build-out, operating costs, and permitted use — before the full lease is negotiated. Nolo’s commercial lease LOI overview describes it in a similar way, as a document used to outline the basic lease terms early in negotiations.
Investment or fundraising discussions. In these situations, an LOI may help the parties align on valuation, structure, rights, and closing conditions before legal documents are prepared. In some cases, a term sheet may be the more common format, but the practical goal is similar: to capture the main terms early.
You may not need an LOI if the deal is simple, the terms are already fully agreed, and the parties can move straight to the final agreement. It may also be unnecessary when there is little left to verify, no exclusivity is needed, and both sides are ready to sign a short agreement right away. In those cases, an LOI may add another step without adding much value.
Is a Letter of Intent Binding or Non-Binding?
Many LOIs are intended to be mostly non-binding, but their legal effect depends on the wording, context, and applicable law. In most cases, the LOI is used to outline the main terms of a proposed transaction and confirm that the parties plan to continue negotiating toward a final agreement. That fits general contract principles, including Cornell Law School’s overview of contract law.
At the same time, a poorly drafted LOI can still create unintended binding obligations. As ACC/WilmerHale explains in its discussion of “non-binding” pre-deal documents, these documents can create legal risk if they are not drafted carefully, even when the parties expect them to be non-binding overall.
It is also common for an LOI to make some provisions binding on purpose, such as:
Confidentiality
Exclusivity
Costs or expense reimbursement
Some LOIs may also make governing law or other process terms binding. ACC/WilmerHale specifically notes that pre-deal documents often include legally binding carve-outs such as exclusivity, confidentiality, and expense reimbursement.
The safest approach is to state clearly which parts of the LOI are non-binding and which provisions, if any, are binding from the moment it is signed. In practice, the legal effect depends less on the title of the document and more on its wording, context, and governing law.
Letter of Intent Format: What to Include
A well-structured LOI usually includes:
Parties — the full legal names of the parties involved.
Transaction overview — a short description of the deal, such as a business purchase, lease, partnership, or investment.
Price or consideration — the main economic terms, including price, rent, equity, deposit, or other compensation.
Timeline — the key dates, milestones, and next steps.
Due diligence — what will be reviewed, by whom, and within what time period.
Conditions — financing, approvals, inspections, consents, or other requirements that must be satisfied before the deal moves forward.
Confidentiality — how sensitive information shared during negotiations will be protected.
Exclusivity — whether one side agrees not to negotiate with others for a limited time.
Costs — who pays for legal work, due diligence, inspections, or other transaction expenses.
Non-binding statement — a clear explanation of which parts of the LOI are non-binding and which parts may still be binding.
Signatures — signature blocks for the parties or their authorized representatives.
How to Fill Out the LOI Template
To complete the LOI template, replace each placeholder with the actual terms of your agreement. Keep the language clear and specific: The LOI should summarize the main points of the agreement without turning into a final agreement.
Before submitting your draft, make sure you complete these key sections:
Parties: Use the full legal names of all persons or companies involved.
Transaction overview: Briefly describe the proposed transaction, such as a business purchase, lease, partnership, investment, or real estate transaction.
Price or Consideration: Specify the purchase price, rent, investment amount, deposit, equity share, or other underlying financial conditions.
Timeline: Include key dates for due diligence, document review, signing, or closing.
Due diligence: Explain what will be reviewed and how long the review period will last.
Conditions: Specify all approvals, funding, inspections, consents, or other requirements.
Binding and non-binding terms: clearly define which sections, if any, are intended to be binding, such as confidentiality, exclusivity or costs.
Review the completed LOI before signing to ensure that no important term is vague, missing, or inconsistent with what the parties actually negotiated.
Letter of Intent Example
Below is a simple LOI example. It shows the basic structure of the document and should be adapted to the actual transaction.
Letter of Intent
Date: 04/23/2026
Parties:
This Letter of Intent is entered into by ABC Holdings LLC (“Buyer”) and North Point Retail Inc. (“Seller”).
Transaction Overview:
The parties intend to continue discussions toward a possible definitive agreement under which Buyer would purchase certain business assets of Seller related to its retail operations.
Price / Consideration:
The proposed purchase price is $850,000, subject to adjustment based on inventory, outstanding liabilities, and any other terms agreed in the transaction documents.
Timeline:
The parties aim to sign a definitive agreement within 30 days after this LOI is signed.
Due Diligence:
Buyer will have 21 days from the date of this LOI to review financial records, material contracts, and other documents reasonably necessary to evaluate the transaction.
Conditions:
This proposal is subject to satisfactory review, internal approvals, and agreement on the transaction documents.
Confidentiality:
Both parties agree to keep non-public information shared during the negotiation process confidential, except where disclosure is required by law.
Exclusivity:
For 14 days after signing this LOI, Seller agrees not to solicit or negotiate competing offers relating to the same assets.
Costs:
Each party will bear its own legal, advisory, and transaction costs unless otherwise agreed in writing.
Non-Binding Statement:
Except for Confidentiality, Exclusivity, Costs, and any other provisions expressly stated as binding, this LOI is non-binding and does not obligate either party to complete the transaction unless a final agreement is signed.
Signatures:
ABC Holdings LLC
By: ____________________
Name:
Title:
North Point Retail Inc.
By: ____________________
Name:
Title:
Common Mistakes to Avoid
Even if the LOI is not the final agreement, vague language can still create confusion, slow down negotiations, or lead to commitments that the parties did not expect.
Before signing or sending an LOI, pay attention to these common mistakes:
There is no clear end date for exclusivity. If one of the parties agrees not to negotiate with the others, the LOI must clearly indicate when this restriction ends.
Vague price terms. If the agreement includes adjustments, deposits, commitments, or other price mechanics, they should be clearly stated.
There is no scope of due diligence. The LOI should explain what will be reviewed and how long the review period will last.
Unclear binding language. The document should clearly indicate which sections are binding and which are non-binding.
Using the wrong template. Different types of deals require different LOI terms, so a generic template may miss the most important terms.
The most common mistake is a false sense of clarity: The LOI looks complete, but the most important terms remain fuzzy.
FAQs
Q: How long should a letter of intent be?
A: Most LOIs are short and focused. One to three pages may be enough for a simple transaction. More complex transactions may require a longer LOI, but this should still avoid unnecessary details.
Q: Who should sign the Letter of Intent?
A: The LOI must be signed by the parties involved in the proposed agreement or by authorized representatives such as company owners, officers, managers, or agents with the authority to sign.
Q: Can the LOI be changed after it has been sent?
A: Yes. The LOI is often part of the negotiation process, so the other party may suggest edits before signing. Any important changes should be made in writing.
Q: What happens after both parties sign the LOI?
A: The parties usually move on to the next stage of the agreement, such as due diligence, funding review, preparation of documents, or negotiation of the final agreement.
Q: Should I send LOI as a Word or PDF document?
A: A Word document is easier to edit during negotiations, while a PDF is better suited for a cleaner version ready to be viewed or signed. In many cases, the parties first exchange edits in the DOCX and sign the final version of the PDF.
Sources and References
