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 Massachusetts, 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 key points of the proposed agreement and facilitates the negotiation process. It usually includes terms such as the structure of the deal, price, and due diligence requirements, but it is understood that these terms are subject to further negotiation and refinement. Importantly, an LOI often contains confidentiality and nondisclosure clauses to protect the sensitive information exchanged during negotiations. While the LOI itself generally does not create a legal obligation to proceed with the transaction, certain provisions within it, like confidentiality clauses, may be legally binding. Parties should be cautious in drafting LOIs to avoid inadvertently creating binding commitments, and it is advisable to include language that clearly states which parts, if any, are intended to be binding.