When should I use a Letter of Intent?

What is a Letter of Intent and when should I use one?

A Letter of Intent (LOI) is a document outlining the intentions of two or more parties to enter into a formal agreement. You should use one when you want to express interest in a deal or partnership before finalizing the details.

Can you give me an example of when an LOI is typically used?

Sure! An LOI is often used in real estate transactions, where a buyer expresses interest in purchasing a property before the final contract is drawn up.

Are there any risks associated with using an LOI?

Yes, there can be risks. An LOI may create binding obligations if not carefully drafted, so it's important to clarify which parts are binding and which are not.

How do I draft an effective LOI?

To draft an effective LOI, clearly outline the key terms, intentions, and any conditions that need to be met. It's also wise to consult with a legal professional.