Letter of Intent

A Letter of Intent (LoI) is a legal document that may be used by someone to declare their intention for a particular purpose such as to make a sale or purchase or to clarify certain aspects of a business transaction or such. A Letter of Intent is used to show that one intends to proceed towards the negotiation for the sale or purchase of something and to secure one’s interest in the same.  

The LoI shows the seriousness of the party to continue towards a sale or purchase and that the other party must stop entertaining other offers for this purpose. You must hire the top Documentation Lawyers in India to help you draft a Letter of Intent that is well-drafted and legally sound.

Draft a Letter of Intent Online
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What You'll Get In The Package

Inclusion

  • 20 minutes introduction call with the advocate for you to know your lawyer and discuss the work to be undertaken together.
  • Documents checklist
  • Documents verification
  • Letter of Intent drafting
  • Handling of required paperwork for the purpose of the LoI

Exclusion

  • The advocate shall not undertake any additional work apart from the drafting of the Letter of Intent
  • You may hire the advocate for any additional legal requirements that you may have.

Documents Required for Drafting Letter of Intent

  1. Information regarding the parties
  2. Information regarding the goods or services in consideration
  3. Additional documents required

Procedure for Drafting of Letter of Intent

  1. You discuss the purpose of the LoI with the lawyer and the essentials that it must contain
  2. Your expectations and limitations are laid down including such provisions that are negotiable and that which is non-negotiable
  3. Draft LoI is drafted by the lawyer and deliberated by you
  4. Final draft of the LoI is prepared by the lawyer
  5. The final LoI is signed by you and sent to the other party

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FAQs

When is a Letter of Intent necessary?
A Letter of Intent is necessary when you want to show your seriousness in a sale or purchase and you want to communicate to the other party that they should stop entertaining other options for the same. It is essential to secure your interest in such sale or purchase.
What information should be mentioned in the LoI?
You must include the following information as part of the LoI necessarily: 1. Details of the parties including contact information, business name, etc. 2. Details of the sale or purchase to be made including the price and timeline 3. Details of the rights and liabilities of the parties 4. Details of the negotiation rights 5. Details of the termination clause in case of the sale or purchase not being undertaken
Is a LoI legally binding?
Parts of a Letter of Intent may become binding at the instance of the parties. However, generally, a Letter of Intent is not legally binding as it is seen as a sale or purchase order which is used to secure funding or as proof of the value of the business. You may have a recourse if the parties do not follow through to an actual legal agreement if it leads to a financial damage to the party.
What are the different types of Letter of Intent?
A Letter of Intent may be used for many purposes such as: 1. Purchase of a business, real estate or general property which lists the name, title, and address of both the parties along with the time and date of the intended purchase. 2. Sale of a business, real estate or general property which lists the name, title, and address of both the parties along with the time and date of the intended sale. 3. To accept a scholarship or admission to a college.
What precautions should be taken for writing a LoI?
You should necessarily keep in mind the following factors when you are writing a LoI: 1. That the proper name and address of the parties are mentioned 2. The terms of the transaction must be clearly mentioned 3. The date on which the transaction is intended to be made should be mentioned 4. The negotiable and non-negotiable terms should be clearly laid down
What limitations can be mentioned in a Letter of Intent?
You may impose limitations in your LoI regarding the timeline of the sale or purchase. You may give a deadline within which the transaction must be completed and that if it oversteps the deadline, the Letter of Intent stands invalidated. You may lay down the negotiable and non-negotiable terms of the sale or purchase. You may also lay down the monetary limitations of the same.
What should be done if the time deadline in the LoI expires?
When a LoI expires, it may either be re-issued or forfeited at the instance of the parties. If the parties intend to go ahead with the sale or purchase at a later date, they may re-issue the LoI stating the revised date at which the same is to be undertaken. However, if the parties no longer intend to proceed with the sale or purchase, the LoI may be dropped. However, in such instances, there may be certain legal implications if the same had been agreed upon by the parties.
When should a company enter into a LoI?
You should enter into a LoI only when it is necessary for your company since not adhering to the terms of the LoI may have legal implications depending upon the terms therein. You must enter into a LoI when it is necessary for the work being undertaken by your company.