Loi (Letter of Intent)

A letter of intent or LOI is a document outlining an agreement between two or more parties before the agreement is finalized. The concept is similar to the so-called heads of agreement. Such agreements may be Asset Purchase Agreements, Share Purchase Agreements, Joint-Venture Agreements and overall all Agreements which aim at closing a financially large deal. LOIs resemble written contracts, but are usually not binding on the parties in their entirety. Many LOIs, however, contain provisions that are binding, such as non-disclosure agreements, a covenant to negotiate in good faith, or a â€Å"stand-still† or â€Å"no-shop† provision promising exclusive rights to negotiate. An LOI may also be interpreted as binding the parties if it too closely resembles a formal contract. The purposes of an LOI may be treated as: to clarify the key points of a complex transaction for the convenience of the parties * to declare officially that the parties are currently negotiating, as in a merger or joint venture proposal * to provide safeguards in case a deal collapses during negotiation An LOI may also be referred to as a memorandum of understanding (MOU), term sheet or discussion sheet. The different terms reflect different styles, but do not indicate any difference under law. A contract, in contrast, is a legal document governed by contrac t law. There is however a specific difference between an LOI and MOU, whereby an LOI is the intent from one party to another and does not in this case have to be signed by both parties, whereas an MOU is an agreement between two or more parties, which should be signed by all parties to be valid. [edit] Specific examples See also: National Letter of Intent * Education. In the United States, Letters of Intent are frequently reached between high school senior athletes and colleges and universities, which then reserve athletic scholarships for the athletes upon graduation. Academia. In academic settings Letters of Intent are part of the application process. There they are also known as Statement of purpose or Application Essay. * Solicitation. A letter of intent (LOI) is highly encouraged but it is not required or binding, and does not enter into the review of a subsequent application. The information that it contains allows government staff to estimate the potential workload and plan the revie w. LOI, letter of intent, Grant Solicitation, retrieved 2008-05-21 * Disability. The LOI for a child is a document written by the parents or guardians that describes the child's or adult child's history, current status, and location of all other documents. In the event of the death of the disabled child's parents or guardians, courts rely upon the family's LOI for guidance in understanding the family's wishes. * Schools. School Administrators, particularly at high schools, need a Letter of Intent to approve the formation of a club. * Real Estate. In cases where the real property in question is not listed on the MLS or listed with a Realtor, there may not be an easy way to notify the owner of the property and other interested parties of intent to purchase. Often it is necessary to officially begin the process of a purchase and allow all peripheral interested parties to begin any other processes (such as a multi-million dollar loan for a commercial property may require a letter of intent before a financial institution will allow personnel to spend time working on said loan) necessary for the completion of the sale.