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In many business transactions, parties negotiate and sign a letter of intent (LOI) to preliminarily agree on basic terms before drafting a full agreement. An LOI can be formal or informal and varies in length. It typically begins as a proposal from one party and is then modified through negotiation to reflect both parties' expectations. If they can't agree on an LOI, it often indicates a lack of potential success in finalizing the deal. LOIs can be used for various transactions, such as lease arrangements, property sales, or the purchase of business assets or stock. Usually, letters of intent include key terms to be discussed in the subsequent detailed agreement.
