What is a letter of intent?
A letter of intent is a non-binding contract that comes before a binding agreement is signed. Such binding contracts may come in the form of a share purchase agreement or asset purchase agreement, but the letter of intent format is used to help communicate the want to form an agreement. A letter of intent will not commit to anything, but it is the intention aspect of it that can help in both future private or occupational contracts. It may even include the price regarding a potential sale transaction or a fee for a future working relationship. However, importantly, a letter of intent should usually not contain guarantees.
When writing a letter of intent, it is essential to bear a few things in mind. It is crucial to choose the proper letter of intent format and layout for your particular situation. Then, ensure you have completed all the research you can on the company you are writing to before completing it. Try to include as much of what you would have wanted to include in an end contract as a letter of intent can be a good starting point for a draft contract. It can work as a springboard for negotiations when discussing minor aspects of a potential agreement. Finally, a letter of intent should provide some assurance that you both want to enter into that agreement and that you are interested in a transaction.
A letter of intent’s advantage is that it is a declaration of what you intend to do without providing guarantees at that juncture. It means more work can be done to ensure that whatever contract comes after it (if any contract at all), the result is an agreement that is far better for both sides. By making a letter of intent, companies can illustrate their determination to complete a business deal. Therefore no time or money is wasted looking at potential buyers or business partners. It can help cut out a great deal of work for both sides involved, and you can come to an agreement far more quickly than if a letter of intent is not sent.
Contractbook can help when it comes to writing a letter of intent through the mass resources our website has to offer. Not only that but the library of contract templates we have means that when it comes to formalizing any agreement, there will likely be a contract template that you need ready to go. It makes coming to an agreement that much quicker and easier. However, importantly, due to the software we supply, on our contract management platform, staying on top of where both sides are in the process is so much more efficient and negotiation is far more effective.