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 Virginia, a Letter of Intent (LOI) is typically a non-binding document that outlines the preliminary understanding between parties who are considering entering into 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 deal, indicating the intention to negotiate in good faith and setting the stage for further negotiations. It is important to note that while the LOI itself is generally not legally binding regarding the commitment to finalize the transaction, certain clauses within it, such as confidentiality and nondisclosure terms, can be enforceable. Parties should be cautious to clearly specify which parts of the LOI, if any, are intended to be binding. In Virginia, as in other jurisdictions, the enforceability of these terms would be subject to the specifics of the language used and the context of the agreement, and it is advisable to consult with an attorney to ensure that the LOI accurately reflects the parties' intentions and complies with applicable laws.