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In business transactions, parties often negotiate and sign a letter of intent (LOI) to outline basic terms before committing to a full agreement. An LOI can be formal or informal and varies in length. It serves as a proposal that is negotiated and modified to reflect both parties' expectations. If an agreement on the LOI cannot be reached, it may indicate challenges in finalizing the deal. LOIs are applicable in various transactions, such as lease arrangements or the purchase and sale of property, stock, or assets. Typically, letters of intent include key terms essential for the transaction's progression.