A “letter of intent” (LOI) is a unique and useful instrument in conducting business transactions. Used most commonly in proposed acquisitions, LOIs permit the parties to document their understanding of key deal points and express their expectations of what each party will and will not do. But an LOI can also be an inherently contradictory exercise, particularly regarding the all-important question of whether the LOI is a binding legal document. Parties to an LOI can find themselves on the wrong end of a lawsuit arising from a document they thought was unenforceable.
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