letter of intent

Definition

A letter from one company to another acknowledging a willingness and ability to do business. A letter of intent is most often issued as acknowledgment of the fact that a merger between companies or an acquisition is being considered seriously. Sometimes, a letter of intent may also be issued by a mutual fund shareholder to indicate that he/she would like to invest certain amounts of money at certain specified times. In exchange for signing a letter of intent, the shareholder would often qualify for reduced sales charges. A letter of intent is not a contract and cannot be enforced, it is just a document stating serious intent to carry out certain business activities.

Use letter of intent in a sentence

You may need to sign a letter of intent if you are doing business with a company for the first time and they don't know you.

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The letter of intent was encouraging as we knew there was extensive demand for our business but we wanted more of a guarantee.

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He got a letter of intent from the man gating that he wanted to buy the property, so he got ready to go visit him and make a deal.

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