Letters of intent, while not legally binding, are one of the most important documents that you will sign when selling your shares or assets. The purpose of this type of letter is to assure the buyer that the seller will sell to him only and that the buyer will keep all information disclosed in the LOI confidential and will not withdraw his interest.
It may seem complicated on the face of it but a letter of intent can actually save you from a lot of complications. Let’s say that you have been promised an amount against some shares that you hold and you would like to seal the deal but there is still some time before you can do it legally. A letter of intent will help you in sealing the deal somewhat legally. In a court of law, a letter of intent may be used as evidence even if it isn’t legally binding.
Now let’s see what a letter of intent consists of. An LOI can be made between two companies or two individuals. Since this is not a legal document, you have pretty much a lot of control over what you write in it. Details should include information regarding amount of shares and their value, including the time period during which the actual sale is required to take place.
Here is a sample letter of intent to sell shares that you might be interested in:
June 10, 2015
389 Fairview Avenue
Caldwell, ID 10382
Dear Mr. Forsyth:
This letter establishes the intention of Embassy Suites, (henceforth known as the Seller) to sell 10,000 shares to Marriot International, (henceforth known as the Buyer).
The Seller and Buyer are henceforth collectively to be referred to as the Parties to this agreement, the outlines of which are:
• The provisional purchase price agreed for the 10,000 shares is set at $50,000 @ $5 each
• The Buyer agrees to pay the total sum at the time that the first legal agreement is drawn up
• The formal agreement will be executed within 90 days following the execution of this LOI
• Following the formal agreement, neither of the parties will negotiate nor enter into discussion with any other party, nor offer shares for sale / purchase
If the foregoing terms are acceptable to you, please indicate by signing the enclosed copy of this letter of intent and returning it to the undersigned.