How to Write a Formal Letter of Intent

Updated March 23, 2017

A letter of intent is a piece of communication that establishes the background for a deal between two parties. For instance, if a business person plans to buy a business from another party, he would draw up a letter of intent to set forth preliminary details regarding the transaction and let the other party know that he's serious. Some agreements are non-binding, meaning that it's not a legal contract, while others are binding, meaning that it's part of a contractual agreement. In most cases, a formal letter of intent is binding.

Format the note as a basic business letter in a word processing program. Place the date at the top. Write the recipient address next and the greeting after that, and then begin the body of the letter after the greeting. Close the letter with a basic professional salutation (such as "Sincerely" or "Regards").

Introduce yourself as a party who intends to purchase the property or business. Identify all parties involved with the transaction, and include your general business information if applicable. Let the buyer know in express terms that this is a formal letter of intent--you can simply state "This is a formal letter of intent" in the letter--so that he knows you're serious.

Write in the amount that you intend to pay for the property or business. Describe the property or business that you plan to purchase in detail. List all items that you intend to purchase at that price.

Clarify if any of the terms of the agreement are still up for negotiation. For instance, if you're unsure about the function of a piece of equipment, let the seller know that you will only purchase the equipment at that price after a thorough inspection. Tell the seller that you will discuss further details at a later date before signing final paperwork.

Define how any disagreements will be resolved in case of a dispute---preferably through arbitration with a neutral third-party.

Discuss the next move required to complete the transaction. For instance, if you plan to hold a meeting with lawyers present, give the proposed meeting date and time. Explain that you fully intend to sign paperwork related to the transaction assuming that your final verbal negotiations are acceptable to both parties.

Things You'll Need

  • Word processing program
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About the Author

Louise Balle has been writing Web articles since 2004, covering everything from business promotion to topics on beauty. Her work can be found on various websites. She has a small-business background and experience as a layout and graphics designer for Web and book projects.