Letter of Intent

A letter of intent is a document that a firm sends to another to express their desire and capability to do business. A letter of intent is typically provided when a merger or acquisition is being seriously examined. A mutual fund shareholder may occasionally write a letter of intent to say that they intend to make investments in a particular amount of money at a particular period. The shareholder would frequently be entitled to lower sales costs in exchange for executing a letter of intent. A letter of intent just declares a sincere desire to engage in specific commercial activity; it is not a contract and cannot be enforced.