Letter of Intent Best Practices
Two best practices classified as the Detailed Approach and the Simple Approach are identified in the findings below. The peculiar feature of the Detailed Approach is that it sheds more information on the terms and conditions to govern the transaction, while that of the Simple Approach is that it is still professional in its brevity.
Best Practices: The Detailed Approach
- One of the best practices for writing a letter of Intent (LOI) for the purchase of goods or products is by using what can be referred to as a detailed approach.
- A detailed approach will outline all the terms and conditions that will govern the transaction irrespective that LOIs are not binding on both parties. However, some provisions like non-disclosure and governing law may be binding.
- A detailed approach may decide to execute the LOI as confidential or non-confidential.
- A peculiar feature of this type of best practice is that the LOI contains headings that are bolded. The headings serve as introductory topics to the paragraphs that follow, and subject title for the letter below the salutation is usually a surplus requirement and, therefore, not inputted.
- One of the detailed approach features is that it may create a feedback space for the seller to respond in consensus to the LOI. This may, however, not be necessary as a proper sales agreement is expected to be drafted after both parties consent to the terms of the LOI.
- Some content for this type of LOI includes provisions for transaction details, the timeline for delivery, warranties, termination, and governing laws. The elaborate structure of this best practice, in the order of arrangements, are buyer's address (typically a letterhead), date, seller's address, salutation, introduction, the body of the letter (usually two or more paragraphs), clauses (such as warranties, termination, governing laws, miscellaneous, and so on), and conclusion.
- This best practice for writing employs the use of block styling in its structure, as is the usual case with LOIs.
- Words are written in simple fonts, such as Times New Roman, and they are easily editable with at least 1.5 spacing.
Best Practices: The Simple Approach
- One of the best practices for writing a letter of Intent (LOI) for the purchase of goods or products is by using what can be referred to as the simple approach.
- The simple approach is less cumbersome and outlines fewer paragraphs, but it doesn't make it less formal.
- Terms and conditions are usually not contained in the simple approach. The body of the letter is typically structured to state the number of products needed presently and in the nearest future.
- For this type of LOI, there are no introductory or bolded headings to introduce paragraphs. The letter has lesser words and quickly readable.
- More often than not, the simple approach for writing LOIs employs the use of block styling in its structure as well. Unlike the detailed approach, however, it makes more use of subject titles. The elaborate structure of this best practice, in the order of arrangements, are buyer's address (typically a letterhead), date, seller's address, subject title, salutation, introduction, the body of the letter (usually one paragraph or two at most), and conclusion.
- Words are written in simple fonts, such as Times New Roman or Arial, and they are easily editable with at least 1.5 spacing.
We started our findings by looking for LOIs explicitly for the purchase of goods or products. Since the plethora of LOI templates available in the public space is mostly for property, our efforts didn't result in immediate success.
However, we were able to capture some new LOI templates for the following: 1) to purchase products, 2) to purchase electrical appliances, 3) to purchase goods, 4) to purchase equipment, and 5) to purchase computer equipment. We also used an LOI template to purchase the equity in a company to highlight peculiar features viz-a-viz the LOI samples used to illustrate the detailed approach.
We considered the five samples of LOI used as best practices for writing a letter of intent for three reasons: 1) they are recent samples, 2) they explicitly address the purchase of goods or products, and 3) some of them are not free.
In our analysis of these five templates, we were able to determine two best practices for writing a letter of intent for the purchase of goods or products. We then classified these two best practices as the Detailed Approach and the Simple Approach for a more innate understanding of these best practices.