# Letter of intent A letter of intent (LOI) is a short document in which parties set out the main terms of a deal they plan to make, usually stating that most of those terms are not yet binding. ## What it is An LOI comes before the full contract. It records the price, structure and timing that both sides have agreed in principle, so lawyers can draft the real agreement without reopening the basics. It is also called a term sheet, heads of terms, or memorandum of understanding, depending on the deal and the place. Most LOIs are partly non-binding. The business terms are usually stated as intentions only. But a few clauses are often meant to bind, such as confidentiality, exclusivity, and who pays costs. Courts look at the wording and the parties' conduct, so a loosely written LOI can bind more, or less, than people expect. That is the main reason to have a lawyer read one before anyone signs. ## When it is used - Buying or selling a business, or a stake in one. - Leasing commercial space, before the full lease is drafted. See [real estate](/industries/real-estate). - A large supply or partnership deal, before the [vendor agreement](/templates/vendor-agreement) or [partnership agreement](/templates/partnership-agreement). - A job or contractor offer in some fields, though an [offer letter](/templates/offer-letter) is more common. ## What it usually contains | Section | What it covers | Usually binding? | |---|---|---| | Parties and background | Who is involved and what deal they are exploring | No | | Key terms | Price, structure, assets or space, payment timing | No | | Conditions | Due diligence, financing, approvals, board consent | No | | Timeline | Target dates for signing and closing | No | | Exclusivity | A period when the seller won't negotiate with others | Often yes | | Confidentiality | Keeping the talks and shared information private | Often yes | | Costs | Each side pays its own costs, or a split | Often yes | | Binding effect | A clause saying which parts bind and which don't | Yes | | Governing law | Which law applies to the binding parts | Yes | | Expiry | When the LOI ends if no final agreement is signed | Often yes | | Signatures | Both parties | Depends | The "usually binding" column describes common drafting, not a rule. Your LOI says what it says. ## Things to get right - **Write the binding effect clause clearly.** List the sections that bind by number. Say plainly that the rest do not. - **Set an end date.** An LOI that never expires can keep exclusivity alive longer than you meant. - **Don't add terms you aren't ready to keep.** Even non-binding terms anchor the later negotiation. - **Use one version.** If terms change, sign a new LOI rather than marking up the old one by email. General information only, and not legal advice. LOIs carry more risk than their length suggests. Ask a lawyer to read yours. ## How to send it for signature with docuinked ### In the app Upload the LOI and add both signers with signing order on, so the party who offered signs first. Add a text field for each signer's title. LOIs are usually one-offs, so a template is rarely worth saving. ### By API A deal room or CRM can send an LOI once the terms are final. This example adds an `access_code`, shared with the other side by phone, because LOIs often go to addresses you haven't used before. ``` curl https://docuinked.com/v1/documents \ -H "Authorization: Bearer $DOCUINKED_API_KEY" \ -H "Idempotency-Key: loi-project-kestrel-v2" \ -H "Content-Type: application/json" \ -d '{"title": "Letter of intent, Project Kestrel", "pdf_url": "https://example.com/loi-kestrel-v2.pdf", "message": "Signed LOI as discussed. Sections 7 to 10 are binding.", "ordered": true, "signers": [{"name": "Quinn Adler", "email": "quinn@example.com"}, {"name": "Rowan Ellis", "email": "rowan@example.org", "access_code": "KESTREL-58"}], "fields": [{"signer": 1, "kind": "signature", "anchor": "Buyer:"}, {"signer": 1, "kind": "text", "anchor": "Buyer title:"}, {"signer": 2, "kind": "signature", "anchor": "Seller:"}, {"signer": 2, "kind": "text", "anchor": "Seller title:"}], "send": true}' ``` ### From an agent An agent can turn deal notes into a draft LOI and prepare it over [MCP](/docs/mcp). Given the stakes, the live send stops at an `approval_url` until a named person reads it. The approval covers that exact draft; if anyone edits it after, it needs approving again. The agent never signs. See [approvals](/docs/approvals) and [human-in-the-loop](/glossary/human-in-the-loop). ## Related - [Mutual NDA](/templates/mutual-nda), usually signed before an LOI - [Partnership agreement](/templates/partnership-agreement) - [Access code](/glossary/access-code) - [Is an electronic signature legal?](/guides/is-an-electronic-signature-legal) ## Sources Checked 2026-11-07. - [ESIGN Act, 15 USC 7001](https://www.law.cornell.edu/uscode/text/15/7001): a signature or record may not be denied effect solely because it is electronic. - [UETA 1999 text](https://scs.nevada.edu/wp-content/uploads/2020/07/FED_Act99.pdf), section 5(b): whether parties agreed to deal electronically is judged from context and their conduct. ## Common questions ### Is a letter of intent binding? Partly, in most cases. The business terms are usually not binding, while clauses like confidentiality and exclusivity often are. The wording decides, so a lawyer should check it. ### Does signing an LOI electronically change whether it binds? No. Signing electronically or on paper has the same effect on what the LOI says. Whether a clause binds depends on its wording, not on how it was signed. ### What is the difference between an LOI and a term sheet? They do the same job. Term sheets are common in investment deals and are often a table of terms. LOIs are common in acquisitions and leases and read more like a letter. ### Should both sides sign an LOI? Usually yes, so both have accepted the binding clauses. Some LOIs are signed by the sender and countersigned on return, which signing order handles.