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Simple English definitions for legal terms
letter of intent
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A quick definition of letter of intent:
A letter of intent is a written statement that explains what two or more people or companies plan to do together. It's like a promise to work together, but it's not a binding contract. This means that the parties can still change their minds or talk to other people about working together. Sometimes, a court might decide that the letter of intent is actually a binding agreement, but this doesn't happen very often. Other names for a letter of intent include memorandum of intent, memorandum of understanding, term sheet, and commitment letter.
A more thorough explanation:
A letter of intent is a written statement that outlines the preliminary understanding between parties who plan to enter into a contract or agreement. It is a non-binding document that serves as a starting point for negotiations.
For example, if a company is interested in acquiring another company, they may send a letter of intent to express their interest and outline the terms they are willing to offer. The other company can then use this as a basis for further negotiations.
It is important to note that a letter of intent is not a legally binding document and does not prevent either party from negotiating with other parties. However, in some cases, a court may find that a commitment has been made based on the language used in the letter of intent.
Other terms that are sometimes used interchangeably with letter of intent include memorandum of intent, memorandum of understanding, term sheet, and commitment letter.