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is an loi a contract and does it bind any party lets look at what an loi is an loi is short for letter of intent it merely communicates the intentions of the party to proceed with the transaction this document kickstarts the sale process it usually contains the terms of the sale meaning how much is being offered and if there are any seller financing how much will be deposited at the contract signing or not requested time frames of the due diligence and lease arrangements we at guild agencies try to keep the document as simple as possible as for the most part it is non-binding for both parties contract is the binding document which comes after due diligence is satisfactorily completed the loi should be no longer than one or two pages with that said we have seen lois with a lot more verbiage that i just discussed it can be multiple pages with items like confidentiality clauses no shop clause within a certain time frame while the due diligence is being conducted this effectively takes a