Letter Of Intent 101

A letter of intent or “LOI” – also sometimes referred to as a term sheet or memorandum of understanding – is often the first stage of negotiating a lease. When drafted correctly, an LOI can set forth the main “business terms” that will be incorporated into a lease agreement (or other transaction-specific contract or agreement); however, an LOI does not lay out every specific deal point. One of the reasons for that is that all of the specific deal points go in the lease agreement itself, and the LOI is more so used as a tool to enable parties to ensure they are on the same page with respect to the key terms of the proposed transaction before they spend significant amounts of time and money on legal fees, due diligence and other pursuit costs. This article will discuss the various nuances of LOIs.