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 Indiana, as in many other states, a Letter of Intent (LOI) is a preliminary document that outlines the basic terms and understanding between parties who are considering entering into a formal agreement, such as a merger, acquisition, joint venture, or real estate transaction. While an LOI is not typically binding in terms of the obligation to complete the transaction, certain provisions within it, such as confidentiality and nondisclosure terms, can be legally binding. Indiana courts will generally look at the intent of the parties, the language of the LOI, and the context of the negotiations to determine whether any part of the LOI should be enforceable. It is important for parties to clearly state which parts, if any, of the LOI are intended to be binding. If parties wish to ensure that the LOI is not construed as a binding contract for the transaction itself, they should include language that specifies that the LOI is only an expression of interest and that a formal, binding agreement is contingent upon further negotiations and the execution of a definitive agreement.