A LETTER OF INTENT is essentially a model of document that includes key points between two companies that are negotiating a contract.

1. LETTER ON INTENT
Definition
Objectives
Biding on parties
Models for business negotiations

2. DEFINITION
A Letter of Intent is essentially 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.
In certain negotiations, the parties may wish to come to a
preliminary agreement, sometimes called an “agreement to
agree”, which may or not be enforceable, depending on the
circumstances and applicable law.
The Letter of Intent is also known as “Commitment Letter” or
“Memorandum of Understanding” although the latter is wider and
is used for complex operations, especially in countries like China.
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3. Among the purposes of a Letter of Intent are:
• The statement that the parties are currently negotiating.
• Clarifying the key points of an operation for the
convenience of the parties.
• Assess the interest of the other party to carry out the
business.
• Collect the advances that occur in each of the
negotiations.
• Provides guarantees if the deal collapses during
negotiation.
OBJECTIVES
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4. 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.
However, some Letters of Intent, contain provisions
that are binding, such as non-disclosure and non-
compete agreements.
BIDING ON THE PARTIES
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5. The more used Letters of Intent in business negotiations
are those related to Sale, Distribution and Joint Venture
Contracts.
You can find models of these Letters in the following links:
• Letter of Intent for Sale Agreement.
• Letter of Intent for Distribution Agreement.
• Letter of Intent for Joint Venture Agreement.
MODELS FOR BUSINESS NEGOTIATIONS
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