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 Kentucky, as in other states, a Letter of Intent (LOI) is typically a non-binding document that outlines the preliminary understanding between parties who are considering entering into a formal agreement, such as a merger, acquisition, joint venture, or real estate transaction. The LOI serves to identify the basic terms and conditions of the proposed deal, and it often includes provisions stating that the final agreement is contingent upon further negotiation and due diligence. While the LOI itself generally does not create a legal obligation to proceed with the transaction, certain clauses within it, such as confidentiality and nondisclosure terms, can be legally binding. It is important for parties in Kentucky to clearly state which parts of the LOI are intended to be binding and which are not. If the parties wish to make certain provisions enforceable, such as exclusivity or confidentiality, these terms should be explicitly defined in the LOI. An attorney can provide crucial guidance in drafting an LOI to ensure that it accurately reflects the parties' intentions and complies with Kentucky law.