Letter of Intent (LOI)

Drafts a transaction LOI that advances execution while preserving negotiating flexibility. Default posture: non-binding except explicitly designated provisions.

Prerequisites

Party identities, entity forms, and governing jurisdictions.
Transaction type and structure (asset sale, stock sale, merger, investment, JV, option).
Agreed economics: price, payment schedule, earn-outs, escrows, caps.
Timeline: signing target, exclusivity window, diligence period, closing date.
Conditions precedent and responsibility allocation (regulatory, financing, consents).
Binding vs non-binding designation for each term set.
Known constraints: antitrust, sector regulations, board/lender approvals.

Output Structure / Process

Produce an audit-ready LOI in business-letter format using this sequence.

1) Intake Validation

[ ] Party names and addresses complete.
[ ] Transaction purpose stated in one unambiguous sentence.
[ ] Economic terms fully defined and internally consistent.
[ ] Timeline mapped to conditions precedent.
[ ] Definitive documents identified (SPA, merger agreement, ancillaries).
[ ] Binding clause set explicitly chosen by user.
[ ] Governing law and jurisdictional basis confirmed.

2) Clause Matrix

| Section | Required? | Binding? | |---|---|---| | Date / Parties / Purpose | Yes | Non-binding | | Transaction Overview | Yes | Non-binding | | Principal Terms (price, structure, adjustments) | Yes | Non-binding unless stated | | Conditions Precedent | Yes | Non-binding | | Definitive Agreement Process | Yes | Mixed | | Exclusivity / No-Shop | Optional | Usually binding | | Confidentiality | Optional/Yes | Usually binding | | Expenses / Costs | Optional | Usually binding | | Liability Limitation / No-Action | Optional | Usually binding | | Governing Law / Disputes | Yes | Binding | | Signatures / Counterparts | Yes | Binding |

3) Drafting Rules

Always include a plain-language binding-effect section with an enumerated list of binding carve-outs.
Include no-liability clause for failure to close and good-faith negotiation language for definitive agreements.
Keep conditions precedent objective, verifiable, and assigned to a responsible party.
Do not embed tax opinions; use a placeholder for tax allocations.
Definitive agreement controls if conflict with LOI.

4) Template Skeleton

[Date]
[Party A Name]
[Party B Name]

RE: Letter of Intent – Proposed [Transaction Type]

[Opening: parties + transaction purpose]

1. Transaction Overview
2. Transaction Structure
3. Principal Terms
4. Conditions Precedent
5. Binding Commitments (Confidentiality / Exclusivity / Costs / Governing Law)
6. Definitive Agreements and Timeline
7. Termination and Liability
8. Miscellaneous (integration, notices, counsel, no assignment)
9. Signature Blocks

5) Quality Gate

[ ] Defined terms consistent throughout (Transaction, Closing Date, Effective Date, CPs).
[ ] All amounts specify currency, basis, and payment schedule.
[ ] Non-compete references included only if jurisdictionally supportable and requested.
[ ] Public-company-sensitive language flagged with compliance review placeholder.

Guidelines

Use clean drafting style; avoid overcommitment language in non-binding portions.
Do not omit remedies for breach of expressly binding clauses.
If existing NDA is signed, state LOI is supplemental and preserve NDA hierarchy.
For regulated sectors, add counsel review notes on approvals and filing requirements.
For cross-border transactions, flag foreign-law and conflict-of-laws risk.
If anti-circumvention concern exists, add carve-outs and enforcement language for exclusivity.