Letter of Intent (LOI) is a preliminary agreement between negotiating parties. After the preliminary agreement, the parties hope to enter into a concrete contract in the near future. These are non- binding documents or are they? Of course, some of the general information listed on the document includes: prices, down payments, confidentiality agreements, and financing.
When drafting any legal document, accuracy is pivotal, especially in the law of property and land planning. One legal concept that can possibly make a Letter of Intent relevant and possibly controlling is the parol evidence rule. This rule makes any other prior agreements or documents irrelevant when the parties sign a final embodiment of there agreement. So, if two negotiating parties move forward in there transactions and the LOI is the only written document available, the LOI will likely be given great weight by the court. It will be given weight b/c there are no other final documents to show otherwise. These are rare instances, but accuracy and due diligence will negate this occurrence. No seller or buyer wants to be held to unfavorable terms in a LOI, except when they are receiving the windfall.