letter of intent

Definition

A preliminary written agreement outlining proposed transaction terms before drafting a formal contract, common in commercial real estate. The 'let's agree to maybe agree later' document that lawyers insist isn't legally binding but kinda is.

Example Usage

They signed a letter of intent establishing the purchase price and due diligence period before spending $50,000 on legal fees for the actual contract.

Origin

Commercial transaction practice emerging in the 20th century

Fun Fact

Despite usually containing 'non-binding' language, LOIs can accidentally create enforceable obligations if not carefully drafted, spawning thousands of lawsuits.

Source: Commercial real estate transaction standards

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