A letter of intent (LOI) is a document that summarizes the understanding between two or more parties regarding a potential transaction. LOIs are commonly used when the parties are contemplating a merger-acquisition, joint venture, real estate purchase or lease, or other significant transaction. An LOI outlines the general terms of the deal, often with the stated understandings that the specific terms of any deal are subject to further negotiation, and that the parties are not obligated to complete a transaction. Because the parties will likely be disclosing confidential information—including the fact that they are having such discussions—the LOI should usually include confidentiality and nondisclosure terms.

In Arkansas, a Letter of Intent (LOI) is typically a non-binding document that outlines the preliminary understanding between parties who are considering entering into a contract or agreement, such as a merger, acquisition, joint venture, or real estate transaction. The LOI serves to express the parties' intent to negotiate in good faith and usually includes key terms and conditions of the proposed deal. However, it is important to note that the LOI itself does not usually create a legally enforceable obligation to complete the transaction, except for certain provisions that are meant to be binding, such as confidentiality and nondisclosure clauses. These clauses are crucial to protect the sensitive information exchanged during negotiations. Parties should be aware that while the LOI is generally non-binding, certain language or actions could potentially create binding obligations if not carefully drafted and reviewed by an attorney. Therefore, it is advisable to consult with an attorney when drafting or signing an LOI to ensure that the parties' intentions are accurately reflected and to avoid unintended legal consequences.