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.
A large supply or partnership deal, before the vendor agreement or partnership agreement.
A job or contractor offer in some fields, though an 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. 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 and human-in-the-loop.

Mutual NDA, usually signed before an LOI
Partnership agreement
Access code
Is an electronic signature legal?

Sources

Checked 2026-11-07.

ESIGN Act, 15 USC 7001: a signature or record may not be denied effect solely because it is electronic.
UETA 1999 text, 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.

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