Letter of Intent (LOI)

A letter of intent (LOI) is a document that states a party's tentative intention to doing business with another. The main elements of a potential agreement are described in the letter. LOIs are frequently used in significant commercial transactions and have a structure akin to term sheets. However, one significant distinction between the two is that while term sheets take the form of a listicle, LOIs are delivered in letter styles. A shareholder may also write a letter of intent to say that they intend to make investments in a particular amount of money at a particular period. Frequently, the shareholder would be entitled to lower sales costs in exchange for signing a letter of intent. A letter of intent cannot be enforced because it is not a contract.