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 Minnesota, 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 contract is drafted. It usually includes key terms such as the structure of the deal, price, and timeline, but it also emphasizes that these terms are subject to further negotiation and due diligence. Importantly, the LOI often states that the parties are not legally obligated to complete the transaction based on the LOI alone. To protect the sensitive information exchanged during negotiations, the LOI should contain confidentiality and nondisclosure provisions. While the LOI itself is generally not legally binding regarding the transaction's main terms, the confidentiality and nondisclosure clauses can be enforceable under Minnesota law. Parties should be aware that certain actions or language within an LOI could create binding obligations if they imply a commitment to proceed with the transaction, so it is advisable to have an attorney review the document before signing.