ACROBAT FOR BUSINESS | 10-MINUTE READ
What is a letter of intent (LOI) and how to write one.
Write a letter of intent that outlines terms for a clear agreement.
What is a letter of intent?
A letter of intent states a preliminary commitment by one party to do business with another party. It is very similar to a memorandum of understanding, a nonbinding document that usually precedes binding agreements.
When to use a letter of intent.
Whether working independently or as part of a larger organization, anyone can use an LOI. For individuals, a letter of intent is comparable to a personal pitch that states an intent to accept an opportunity — it doesn’t set specific terms of a potential transaction or count as due diligence. For students or job seekers, for example, a letter of intent shows professional courtesy and helps them stand out from a crowded field of potential applicants.
On the other hand, businesses need due diligence before they engage in a transaction, which means taking reasonable steps to satisfy potential specific legal requirements by laying them out in detail in the letter’s contents. Those specifics can include transparency about the purpose of the intent, the size of the transaction, the potential cost, and the anticipated transaction date — although the letter can cover even more information than that.
Jobs
Job seekers can write a letter of intent to hiring managers as a way to introduce themselves and provide more context and information about their experience. Unlike writing a cover letter, a job seeker can send letters of intent at any time, with or without a job application. Job postings can attract numerous responses, and a letter of intent can help a candidate get noticed. It can also help a recruiter or employer recognize additional information about a candidate (beyond their current job title or LinkedIn profile), such as specific skills and experience related to the open position.
Business
Businesses can write a letter of intent to purchase to announce new transactions or relationships before creating official paperwork like definitive agreements or purchase agreements. Sales, purchases, mergers, and joint ventures can all begin with LOIs, declaring their intentions and announcing who will be involved in the potential interaction.
Education
Students may submit a letter of intent to a university as a part of their admissions materials. This letter usually declares their intent to enroll and includes an outline of their educational background. If a student is applying to a graduate program, the letter should also include specific examples of what they intend to study. Letters of intent in education are also known as statements of purpose.
What is an LOI used for in business?
Businesses, in particular, can benefit from letters of intent across a variety of practices. While perhaps most commonly used by sales teams to formalize relationships with customers and move opportunities toward a closed sale, LOIs can benefit many other departments and industries.
Any time a business takes part in a material transaction or plans to write a business proposal, everyone involved can benefit from the use of a letter of intent. Remember that working with a letter of intent is a variation of how to write a business letter.
An LOI can be used to:
- Outline contingencies
- Confirm project scope
- Establish expectations
- Detail key inclusions
- Disclose relevant information
- Summarize time frames
- Reference supporting documents
- Verify the document status as nonbinding
- Notify third parties
How to write a letter of intent.
While the content will vary for each situation, letters of intent should provide all parties a clear roadmap for what’s to come should each party act in good faith and stay true to their word. They introduce goals, expectations, and basic terms, such as time frames for potential transactions, which helps all involved to better understand the potential business deal structure. This clarification enables parties to identify potential deal breakers or binding items that will become important in the future. A letter of intent template is helpful as a reference to ensure no details are missed.
What to include in a letter of intent.
Letters of intent provide an opportunity for businesses to outline, clarify, and announce a potential transaction.
A letter of intent should include the following information:
- Contact information. As formal business communication, a letter of intent should begin with the company’s contact information and the recipient’s contact details.
- Salutation. Use the recipient’s full name, even if everyone involved is on familiar terms. Standard salutations include “Dear” and “To Whom It May Concern.”
- Introduction. Clearly state the reason for writing and the goal of the document. Details should include the central topic or project and key stakeholders.
- Body copy. Use several paragraphs to explain the details of the initiative, including scope, expectations, timeframes, contingencies, involved parties, and pricing. Also, use this space for due diligence and disclose any required information.
- Closing. State the actions required to move forward (likely a signature) and include the expiration date of the letter of intent.
- Signature. Sign and date the letter as a record of submission.
- Enclosures. List out any supporting documents, such as contracts, product sheets, or nondisclosure agreements, that are included with the letter for review.
Businesses can benefit from routing the drafted letter of intent through a legal review before passing it along for external signatures. A legal team can refine language or include terms to safeguard the company’s best interests for the proposed transaction.
How to format an LOI.
As a formal business document, a letter of intent should follow several formatting standards:
- Letterhead. Include standard company letterhead, such as a corporate logo.
- Margins. Set all page margins to one inch.
- Fonts. Use a standard system font such as Arial or Times New Roman.
- Spacing. Incorporate single spacing between lines and double spacing between paragraphs.
- Alignment. Left-align all content with the page margin.
- File type. Print the Word file to PDF to ensure a secure, compatible viewing experience for all recipients.
Letter of intent sample to reference.
Letters of intent may follow the same format, but content specifics will vary with each communication. Businesses can use a template to get started and modify the copy to reflect their unique needs.
Letter of intent template.
Use the following template for how to write a letter of intent.
[Your Company Name]
[Your Company Street Address]
[Your Company City, State, and Zip Code]
[Date]
[Recipient Name]
[Company Name]
[Company Street Address]
[Company City, State, and Zip Code]
Dear [Recipient Name],
[Introductory paragraph: State the topic and goal of the letter.]
[Body paragraphs: Include supporting information, details, timeframes, contingencies, etc. Add additional paragraphs as needed.]
[Conclusion paragraph: State next steps and expiration date.]
Sincerely,
[Your Signature]
[Your Name]
[Your Job Title]
[Your Company Name]
Letter of intent complete sample.
With this template, you can easily and professionally create your own letters of intent. View a completed sample letter that demonstrates the formatting, progression, and tone of a successful LOI.
XYZ Company
987 Main Street
Anywhere, NY 11111
June 12, 2024
John Doe
ABC Company
123 Main Street
Anywhere, NY 11111
Dear Mr. Doe,
This letter of intent establishes the terms for a potential sale of 15,000 custom widgets by XYZ Company (the Seller) to ABC Company (the Buyer). This letter is a nonbinding document that, if accepted, will be used to establish a definitive agreement.
The requested customized widgets will be adapted from a stock UPC and configured according to the specifications set forth in this letter. This agreement includes using the same dimensions as the stock product while changing the colorway to Pantone 485 (CMYK 0, 100, 100, 0) and adding the company’s logo at 50% of the product’s main imprint area. The Buyer will affirm full permissions and legal rights to use the provided logo.
To ensure a high level of customer satisfaction, production of the full run will be preceded by a test print requiring stakeholder signoff.
The production of the established custom product quantity is expected to take approximately 30 days from receipt of a signed order. The product will then be shipped via ground services and may take an additional 10–14 days to arrive at the destination designated by the Buyer.
Both the Buyer and Seller agree to keep this letter confidential. As the custom product will be used for bespoke event marketing, the Seller also agrees not to sell competing widgets with similar or matching specifications to a list of defined Buyer competitors for a term of 180 days.
To create a formal purchase order and contract, this agreement should be signed and countersigned by the below parties on or before June 16, 2024.
Sincerely,
___________________
(Seller)
Peter Product
Sales Manager
XYZ Company
___________________
(Buyer)
John Doe
Marketing Director
ABC Company
Best practices for writing a letter of intent.
A letter of intent should be concise yet inclusive of all essential details and establish that a working relationship is warranted by all involved.
To create a high-quality letter of intent, keep these best practices in mind:
- Use formal wording. Address the letter properly and avoid casual language choices.
- Be concise. Be descriptive where essential, but keep core ideas concise and clear.
- Confirm facts. Ensure the main details of the arrangement are accurate.
- Conduct a review. Route the letter to be checked over by relevant team members.
- List key terms. Use bullet points to itemize vital inclusions that may otherwise be overlooked or misconstrued.
- Include clear dates. Incorporate exact dates rather than ranges or generalizations to avoid confusion.
How to sign a letter of intent.
If a letter of intent requires a signature, or if you want to verify that a recipient has reviewed it, you’ll want to include an option for them to return the document with a signature. Sometimes, preliminary negotiations can include disclaimers or legal documents such as a non-disclosure agreement. E-signatures can make these initial correspondences move faster.
While you may create your letter of intent using Microsoft Word or Google Docs, you’ll want to send it out in a more secure format that also preserves the formatting you have applied. Convert your document to a PDF using Adobe to ensure the integrity of the letter and provide an easy way for customers or other third parties to e-sign the file.
Letters of intent FAQs.
How is a letter of intent different from a letter of interest?
While both letters express interest, one difference between a letter of intent and a letter of interest is the level of commitment to the outcome. For example, a letter of intent to a graduate school lets you show why you’d be an asset to their program and that you fully intend to take their offer if accepted. However, a letter of interest is less formal — it’s a good choice if reaching out to an organization that doesn’t have an open position, but you’d like to connect with or demonstrate your interest in their business, purpose, or mission.
Is a letter of intent binding on the parties?
The answer depends on how the letter is written. For example, a letter of intent could be interpreted as binding if the parties agree to specific terms of a business transaction in writing. However, if any of the terms were written vaguely or left open for future negotiation, the letter of intent is meant to record a basic understanding between the parties requiring further negotiation. Have an attorney review your letter to determine how yours may be interpreted.
Where can I find samples of letters of intent?
Using a letter of intent sample can speed up the writing process and help you craft a standout statement. Whether you’re looking for LOI templates for a business merger, joint venture, school application, real estate purchase, or other documents, download and customize a wide range of free letters of intent samples directly from Adobe.
How long should a letter of intent be?
While businesses may be tempted to capture every term and stipulation up front, remember that these documents are preliminary to greater, detailed negotiations. With this factor in mind, a letter of intent should be between one to two pages, depending on how the document is formatted, which is an average of 400 to 800 words.
How long is a letter of intent good for?
Because letters of intent are usually the first step in a longer negotiation period, they typically have an expiration date of three to four days. At most, these agreements can remain open for one to two weeks. When writing an LOI, be sure to include a termination date that can go into effect if not signed and accepted by the necessary parties.
Make your letter of intent even better with Acrobat for business.
Adobe Acrobat for business makes it easy for parties to exchange signatures and begin official relationships. Save time, save paper, and act on your intentions with Acrobat.
Faster contracts, less time in the inbox.
Letters of intent are the beginning of a relationship. E-signatures can help move that relationship along. Adding e-signatures to correspondence doesn’t just cut down on paper — it can also reduce the time everyone spends opening, reading, and sorting through emails. Find out how Adobe reduced contract-related processing time by 36,000 hours and made contracts easier with e-signatures.
More efficient college applications.
Applying for college can be complicated. The University of New Mexico made the process easier for high school students and other applicants. With e-signatures, forms went from potential bottlenecks to an easy, streamlined process.
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