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Memorandum of Understanding
THIS MEMORANDUM OF UNDERSTANDING (the "Document") made as of this ________ day of ________________, ________ (the "Execution Date"),
BETWEEN:
____________________ of _________________________
(the "Purchaser")
- AND -
(the "Seller")
BACKGROUND:
This Document will establish the basic terms to be used in a future real estate contract for sale ("the Contract") between the Seller and the Purchaser. The terms contained in this Document are not comprehensive and it is expected that additional terms may be added, and existing terms may be changed or deleted. The basic terms are as follows:
This Document accurately reflects the understanding between the Seller and the Purchaser, signed on this ________ day of ________________, ________.
_______________________________________________ (Purchaser)
_______________________________________________ (Seller)
A Letter of Intent is also called a/an:
A Letter of Intent (LOI) is a document that is typically used to preface a transaction and to ensure that all the parties involved are in understanding of one another. In the letter, one party makes their interests and objectives known and typically agrees to continue negotiations in the future.
An LOI provides the contact information of all parties involved, some basic terms of the proposed agreement, and the deadline (known as the closing date) by which the parties expect to sign a binding agreement.
LawDepot's Letter of Intent can be customised for:
You should use a Letter of Intent when you would like to express your interest in pursuing a business transaction (like purchasing a product or proposing a business partnership) but have not yet begun or finished negotiating the terms of a formal agreement.
For example, you can use an LOI when you are interested in:
LawDepot's Letter of Intent template is intended for use in business transactions, but can also be used for personal transactions like lending money to a friend or family member.
Unlike a formal agreement, a Letter of Intent typically does not impose obligations or assert rights other than the willingness to discuss the terms of a future agreement.
Although a Letter of Intent could be drafted to be binding, LawDepot's Letter of Intent is not designed to be a legally binding document; instead, it provides a structure for parties to negotiate freely and without the fear of being bound to any terms.
For instance, a business might use an LOI to set the parameters of a business merger or acquisition. While a typical contract might establish the specific terms of the business agreement, an LOI can set expectations for negotiating terms—without getting into the fine details.
A Letter of Intent can last for as long as the parties need to negotiate. You can set a closing date (i.e. the deadline for the parties to enter a formal agreement or end negotiations) in your LOI, but this date is more flexible than fixed. The closing date is merely a suggested time frame in which parties expect to end their communications.
Every business is different in its size, complexity, and due diligence requirements, so the closing date should give each party (depending on their particular situation) a reasonable amount of time to evaluate the offer in a Letter of Intent.
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