How to Write a Letter of Intent: 6 Types of Letters of Intent

A letter of intent (LOI) is a document that states an initial commitment between two parties and details the basic terms and provisions of their proposed transaction, which will then be discussed and resolved as part of the negotiation process. The LOI is typically drafted during the negotiation process and signed once all the terms have been agreed upon, leading to a definitive agreement or final agreement on the deal. This document has various applications, from government grants and real estate deals to employment and college applications.

While they are typically a non-binding agreement, a letter of intent may contain elements of a binding agreement, such as information on non-disclosure agreements (NDA) or agreements to negotiate in good faith. In that manner, they are similar to term sheets or a memorandum of understanding, though the details of an LOI are always presented in letter format and not in bullet points, as is the case with term sheets.

A letter of intent serves a few purposes in a business context:

• To announce a deal. A letter of intent in business may indicate that two parties are embarking on a transaction of some kind, like a merger, purchase agreement of a company or shares, or a joint venture.
• To confirm and outline the terms of a deal. A letter of intent offers documentation that two parties are committed to a deal and provides the chief terms required to complete it. The parties may trade drafts and revisions until all terms are agreed upon, which prevents any surprises for either side at the time of signing. They may also set a timeframe and closing date for the definitive agreement and require due diligence, which is research into any potential liabilities on either side.
• To protect both sides of a deal. A letter of intent in business will often include provisions like an NDA, which requires both sides to keep the details of the deal confidential. They may also have terms regarding exclusivity, which requires a seller to focus solely on the transaction with a buyer and not entertain other buyers or non-solicitation. This exclusivity clause can prevent one party from poaching employees from the other should the transaction go uncompleted.

There are many different types of letters of intent that apply to different transactions, including:

1. 1. Business letter of intent: A business letter of intent announces a preliminary commitment between two business entities. This document outlines the chief provisions required by both sides to complete the deal and reach a definitive agreement.
2. 2. Employment letter of intent: A letter of intent in a job search context announces a job seeker’s interest in working for an employer. Employment-related letters of intent differ from cover letters because they usually focus on the employer itself and not on a specific job. An employment LOI is typically written by an individual, while a company’s legal team frequently drafts a business LOI.
3. 3. Education letter of intent: When used for academics, a letter of intent is part of the application process and confirms a prospective student’s interest in studying at a college or university. This document also serves as a non-binding contract between high school athletes and university sports teams, which asks for an athletic scholarship in exchange for a commitment to play for the school’s team.
4. 4. Family court letter of intent: A letter of intent may be composed by parents to express requirements for raising their children in the event of their deaths. Though not legal documents, prospective guardians can use them in family courts to determine the children’s future.
5. 5. Government grant letter of intent: A letter of intent is used when soliciting government grants that inform the grant agency about the amount of work required by the project and how the individual or organization will apply the grant money to the project.
6. 6. Real estate letter of intent: A real estate letter of intent may indicate a prospective buyer’s interest in purchasing a property, or it may be an agreement between landlords and prospective tenants that details rent and all requirements for tenancy.

There are several important rules for writing a letter of intent regarding a job search:

• Open on the right note. Begin with a business letter format that includes your name, phone number, and email address, along with the date and the company’s contact information. Find out the name and job title of the hiring manager, and address them in the appropriate manner (“Dear Mr./Ms…”). Online research, a quick phone call, or email to the company should provide this information.
• Explain yourself. Your first paragraph should detail, in broad strokes, who you are and why you’re writing. List the job title if you are responding to a job listing. If you are simply expressing your interest in working for a company, note the position or department in which you are seeking employment.
• Give details about your experience. If your letter is in response to a job listing, review its requirements and then list several examples of how your previous years of work experience meet those requirements. If your letter is simply expressing interest in the company, detail the skills that best apply to the company’s operations. Some online research will give you the proper information to hone your experience information.
• Close with confidence. Conclude the letter of intent by detailing your plans for a follow-up. Use a professional closing—“best” or “sincerely”—and either physically sign the letter or provide your email signature if you are sending it in that format.
  
• Use a template. If you’re unsure of the format, you can find a letter of intent template online to help guide you. Many sources will provide a sample letter of intent that you can adapt for your own letter.

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