A declaration of intent may be submitted by one party to another party and negotiated prior to the execution (or signature). In the event of careful negotiation, a LOI can be used to protect both parties in a transaction. For example, a seller of a business may incorporate a so-called non-formal notice provision that would limit the buyer`s ability to recruit an employee from the seller`s business if both parties are unable to complete the transaction. On the other hand, a LOI can protect the purchaser of a business by explicitly conditioning its obligation to debit the transaction if it is unable to finance the transaction.  In real estate where the property in question is not mentioned in a multiple list service, there is no simple way to inform the owner of the property and other interested parties of the intention to purchase. Often it is necessary to officially begin the purchase process, and allow all peripheral stakeholders to start all other processes, with a declaration of intent. For example, a multi-million dollar loan for an industrial property may require a letter of intent before a financial institution allows staff to spend time working on the loan necessary to complete the sale. The same can be followed by any company at the time of purchase. Tenants and landlords can sign a letter of intent before signing a tenancy agreement setting out rental prices and all the terms of the upcoming lease. [Citation required] A letter of intent (LOI or LoI, which is sometimes put forward as a statement of intent in law, but only when it refers to a particular document under discussion) is a document that describes the agreement between two or more parties that they intend to formalize in a legally binding agreement.
The concept is akin to an agreement, a timetable or a letter of intent. These outlined agreements may be merger and acquisition agreements, joint venture agreements, lease-sale agreements and several other categories of agreements that may govern essential transactions.