Letter of Intent (Business): Template and How to Draft One (2026)

What a letter of intent is and when you need one A letter of intent, often shortened to LOI, is a short document that sets out the main terms two parties have agreed in principle, before they sign a full contract. It is used at the start of a deal: a business acquisition, a large supply arrangement, a commercial lease, a joint venture or an investment. The LOI records what both sides think they are agreeing, so that the detailed contract can be drafted against a shared understanding rather than a moving target. The most important thing to understand about a letter of intent is that most of it is not meant to be legally binding, but some of it usually is. The commercial terms, such as price and structure, are normally stated as intentions, subject to a final contract. A handful of clauses, such as confidentiality, exclusivity, costs and governing law, are usually meant to bind straight away. The trap is a document that is unclear about which is which, because a court may decide a term binds even where one party assumed it did not. You need an LOI when a deal is serious enough to invest time and legal cost in, but not yet ready for a full contract. It gives both sides comfort to proceed, and it lets a buyer ask for exclusivity while due diligence runs. This page is general information, not legal advice. ## A letter of intent template you can copy ```

LETTER OF INTENT [Date] From: [Party A name and address] To: [Party B name and address] Re: Proposed [acquisition / supply arrangement / investment / lease] of [brief description] This letter sets out the main terms on which [Party A] and [Party B] intend to proceed. Except for the sections marked BINDING in paragraph 7, this letter is a statement of intent only and does not create a legally binding obligation to complete the transaction. 1. THE TRANSACTION [Party A] intends to [buy / supply / invest in] [describe the subject] for a price of approximately [amount], on the structure described below. 2. KEY TERMS [Set out the main commercial terms agreed in principle: price or price range, what is included, payment, timing, key conditions.] 3. CONDITIONS Completion is expected to be subject to [satisfactory due diligence, board and regulatory approvals, and signing of a definitive agreement]. 4. DUE DILIGENCE [Party B] will give [Party A] reasonable access to [information / premises / records] to carry out due diligence. 5. TIMETABLE The parties aim to sign a definitive agreement by [date]. 6. NON-BINDING NATURE Paragraphs 1 to 5 record intentions only. Neither party is bound to proceed, and either may walk away, subject only to the binding paragraphs below. 7. BINDING PROVISIONS The following are intended to be legally binding now: (a) Confidentiality: each party will keep the other's information and the fact of these talks confidential. (b) Exclusivity: for [number] days, [Party B] will not negotiate a competing deal with any third party. (c) Costs: each party bears its own costs unless a definitive agreement says otherwise. (d) Governing law: this letter is governed by the law of [place]. Signed in acknowledgement: [Party A] ____________ [Party B] ____________

- Language that sounds like a firm promise to complete, such as the parties shall complete, when you mean only an intention.
- Exclusivity granted with no time limit, which can lock a seller out indefinitely.
- Sharing confidential information with no binding confidentiality term in place.
- Treating the LOI as the deal and never signing the definitive agreement it was meant to lead to.
- Forgetting that even a non-binding LOI can create a duty to negotiate in good faith under some laws. ## Keeping deal documents aligned from LOI to signing A letter of intent is the first document in a deal, not the last. Behind it come the due diligence materials, the disclosure letter, and the definitive agreement, and the terms are meant to flow from one to the next. The work that outlasts the LOI is keeping those documents aligned, so the price, conditions and protections you agreed in principle actually survive into the contract you sign. That is the same problem behind contract management in general: drafting from a clear starting document, catching a term that quietly changed between drafts, editing in plain language, and tracking the timetable and conditions that matter, all in one place. [Adira](https://adiralaw.com) is built around that single workspace idea for business contracts, with the deepest coverage today for Indian law and other jurisdictions being broadened. For a single LOI the template above is enough. The point worth borrowing is that a deal is easier to steer when the letter of intent and the agreement it leads to live together rather than in separate email chains.