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 Illinois, a Letter of Intent (LOI) is typically a non-binding document that outlines the preliminary understanding between parties who are considering a major transaction, such as a merger, acquisition, joint venture, or real estate deal. The LOI serves to summarize the main points of a proposed agreement before the final contracts are drafted. It usually includes key terms such as the structure of the deal, price, and timeline, but it is understood that these terms are subject to further negotiation. While the LOI itself does not generally create a legal obligation to proceed with the transaction, certain provisions within it, like confidentiality and nondisclosure clauses, can be legally binding. Parties should be cautious to include language that clearly indicates which parts, if any, are intended to be binding. Illinois courts will consider the intent of the parties and the language used in the LOI to determine its enforceability. It is advisable for parties to consult with an attorney when drafting or signing an LOI to ensure that their interests are adequately protected and to understand the implications of any binding provisions.