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In business transactions, parties often negotiate and sign a letter of intent (LOI) to establish preliminary agreement on key terms before investing time and resources in a detailed agreement. An LOI can vary in formality and length, serving as a proposal that is modified through negotiation to ensure it reflects both parties' expectations. If agreement on the LOI isn't reached, it indicates challenges in completing the transaction. LOIs can be applicable in various deals, including leases, property sales, or the purchase of business stock or assets. Commonly, letters of intent outline essential terms and conditions, guiding the subsequent steps of the transaction.