Letter Of Intent’s Most Important Requirement

Whether contemplating the purchase of a business or the desire to make a charitable contribution, an underutilized mechanism is the “Letter of Intent.” This document refers to making a solicitation to an offer, rather than an offer itself. This has important legal consequences, as the other party’s response to a “solicitation to offer” places no obligation upon the letter of intent writer, whereas an offer gives the other party the power to legally bind you to your statements in the event that what you see is construed as an offer.

The distinguishing characteristic of a letter of intent (LOI) is that it suggests a contemplation that an agreement can be reached in the future rather than uses language that suggests that a deal can be consummated right now. Most notably, a letter of intent states uses word like “It is our expectation that we will be able to offer…” or … Read the rest of this article!