Letter of Intent

Real Estate meaning of Letter of Intent

In the words of the Encyclopedia of Real Estate Terms about Letter of Intent: A letter, note or memorandum setting out a clear intention to take a certain course of action or to enter into a formal agreement. In particular, a letter or other form of writing confirming an intention to enter into a bargain, without intending to create any legally binding contract (Empro Manufacturing Co., Inc. v. Ball-Co. Mfg., Inc., 870 F.2d 423 (1989); McBrien v. Master Development, Inc., 840 F Supp 362 (ED Pa 1994)). After a letter of intent is submitted in acceptable terms, both parties usually negotiate in good faith upon the details of the final contract and carry out any requisite due diligence. In order to ensure that the LOI does not create a binding contract, the sender should make that ‘intent’ known and preferably have the recipient acknowledge that fact. Nonetheless, due to the uncertain legal effect of many letters of intent, they have been described as “an invention of the devil” Quake Construction, Inc. v. American Airline, Inc., 141 Ill.2d 281, 565 NE.2d 990, 1009 (1990) (1 Corbin on Contracts, (1960), § 1.16 n.1).

See also conditional contract, subject to contract, tender.

Michael P. Carbone and Stephen G. Stwora-Hail. Using Letters of Intent in Real Estate Transactions. Probate & Property, 42-49 (Jan/Feb 1997).

Letter of Intent (LOI) in International Trade

Meaning of Letter of Intent (LOI), according to the Dictionary of International Trade (Global Negotiator): A letter of intent is a collection of key points of an agreement between two parties that are negotiating a contract; in this respect a letter of intent is simply the agreement signed prior to the final contract. Without a certain formality, the letter of intent is meant to acknowledge the will of the parties to carry out in the near future all the steps necessary to perform a contract that gives way to a transaction in international business. It involves a reciprocal wills statement, without binding effect, but with high ethical value to the parties who sign. Among the purposes of the letters of intent are include:

Clarifying the key points of an operation for the convenience of the parties.

The statement that the parties are currently negotiating.

Provides guarantees if the deal collapses during negotiation.

Another characteristic of the letters of intent is that it can resemble a written contract but is usually not binding on the parties in their entirety. However, the majority of these agreements, contain provisions that are binding, such as non-disclosure and non-compete agreements. There are different types of letters of intent in international business. The most common are: Letter of Intent for International Sale, Letter of Intent for International Distribution and Letter of Intent for Joint Venture.