Letters of intent are formal letters written between two parties or an individual that expresses the intent of one party to conduct business or any other kind of association with the other party. This is a legal document and consists of certain terms and condition which are mandatory for both the parties to follow. The letter of intent is a type of a contract which contains all the monetary considerations of the agreement too.
Any letter of intent solves the following purposes:
- It clarifies all the key points and expectations of both the parties.
- It declares that both the parties are on negotiating terms in an official and legal manner.
- Safeguards interests of both parties in case of any deadlock or collapse of contract.
The following points should be kept in mind while framing a letter of intent:
- It should contain names and addresses of both involved parties.
- It should point out to the effective date and the period of contract.
- It should contain terms and conditions in a point wise manner.
- All the monetary considerations should be made very clear.
- Since it is a formal letter it should have a professional tone to it.