How to Sign a Letter of Intent

How to sign a business letter of intent

A letter of intent, commonly called an LOI, is a document where one or more parties make a commitment to something that will happen in the future. It differs from a legal contract in that it is intended to undergo additional negotiation before finalizing. In business, a letter of intent is used to show a sign of good faith and to launch more detailed discussions about a possible transaction or arrangement.

Instructions

1. Review the letter of intent to be sure it represents the agreed upon terms and conditions. While the terms of a letter of intent are at the complete discretion of the parties involved, some indication that each party agrees to be bound must exist.

2. Sign or execute the letter of intent. The Uniform Commercial Code § 1-201(39) (1992) legally recognizes any mark made by an interested party for authentication purposes. In virtually all instances, a signature creates this mark of authentication.

3. Comply with all execution guidelines on the face of the document. A less formal signature process will ask that each party sign on a blank line, but it is not unusual for the signatory requirements to be greater. Multiple signatures may be appropriate, notarization may be required or other witnesses to the signing might provide an attestation.

4. Make sure you have met all legal requirements including verifying signatory authority. Some legal purists believe that a signature must be in black ink and each page of the document must be initialed to be binding but the law itself has no such requirement. The law does require that the signer have the actual or perceived authority to execute the document.

5. Review the criteria for digital signatures. Digital signatures are legally recognized as long as certain criteria are met. For information on digital signatures, see the link in the Resources section below.

Tips & Warnings

• This article provides general information about legal topics but is not legal advice.

References

• American Bar Association

Resources

• On Digital Signatures