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 New York, a Letter of Intent (LOI) is generally considered 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 summarize the key points of a proposed deal, facilitating further negotiations. It typically includes terms such as the structure of the transaction, purchase price, and due diligence requirements. However, it is important to note that while the LOI itself is not usually binding, certain provisions within it, such as confidentiality and exclusivity clauses, can be legally enforceable if clearly stated. Parties should be cautious in drafting these terms to avoid unintended binding commitments. New York courts will look at the intent of the parties, the language of the LOI, and the context of the negotiations to determine the enforceability of any provision within the LOI.