Letter of Intent Template (UK): Key Clauses and Tips

Exploring a new supplier, investment or partnership and want something “on paper” without locking your business into a full contract yet? A Letter of Intent (LOI) can help you set the ground rules early, keep momentum and protect your key interests while you negotiate the final deal.

In this guide, we’ll explain what an LOI is under UK law, when to use one, what to include, and provide a UK-focused letter of intent template you can tailor. We’ll also flag the traps that make LOIs accidentally binding and how to move from an LOI to a robust contract with confidence.

What Is A Letter Of Intent (LOI) In The UK?

A Letter of Intent (often called an “LOI”, “heads of terms” or “letter of understanding”) is a short, plain-English document that records the main points you and the other party agree in principle, while you continue negotiating the full contract.

Think of it as a practical roadmap for the deal. It can confirm the commercial outline, how due diligence will run, any exclusivity period, and the target timetable. An LOI also helps align expectations, reduce miscommunication, and give stakeholders confidence that negotiations are moving forward.

Crucially, most UK LOIs are intended to be non-binding on the main deal terms (you’re not yet legally obliged to complete the transaction). However, specific protections inside the LOI are usually binding, such as confidentiality, exclusivity, governing law, and how costs are covered.

Is A Letter Of Intent Legally Binding?

Under UK law, whether an LOI is binding depends on the wording and the parties’ intent. Courts look at what the document says, the language used, and the surrounding context. If your LOI reads like a full contract and includes clear obligations, it may be upheld as binding - even if you called it “non-binding”.

To keep an LOI non-binding on the main deal (but binding on practical protections), business owners typically include:

• A clear “Subject To Contract” statement at the top and in the signature block.
• An explicit clause stating which sections are non-binding (for example, commercial terms) and which are binding (for example, confidentiality, exclusivity, non-circumvention, governing law, and costs).
• Language showing there’s no final agreement until a definitive contract is signed by both parties.

You should also understand the contract basics that make promises enforceable under English law. For instance, consideration (value exchanged) and the intention to create legal relations are key. If you accidentally include these elements for the commercial terms without a “non-binding” carve-out, your LOI could become a binding agreement.

Email negotiations and signed PDFs can complicate matters, too. If you’re confirming terms by email, it’s wise to be cautious about how you phrase acceptance and whether emails could be treated as an agreement. Our overview of are emails legally binding explains how this risk arises and how to manage it in practice.

When Should Your Business Use An LOI?

An LOI is useful whenever you need structure and basic protections while you explore a deal, but you’re not ready to sign the full agreement. Common scenarios include:

• Buying or selling a business or key assets, where you want to lock in price expectations, timelines and an exclusivity window while diligence runs.
• Negotiating a major supply or distribution relationship, where you need to align on volumes, territories and next steps.
• Investment discussions, where a high-level valuation, process and timetable need to be captured before drafting a full term sheet or shareholders’ agreement.
• Collaborations or joint ventures, where both sides want clarity on scope and responsibilities to keep negotiations on track.

Sometimes a different document is a better fit. If you’re setting out a high-level framework without creating legal obligations, a short Memorandum of Understanding can work. Where you want a bullet-point commercial summary before the definitive contract, a concise Heads of Agreement is common. For investment rounds, a focused term sheet is usually the right tool.

Before you share information, consider a standalone Non-Disclosure Agreement (NDA). While you can include confidentiality inside an LOI, a separate NDA is often signed earlier and in broader terms, especially where you’re exchanging financials, customer data or proprietary know-how.

What To Include In A UK Letter Of Intent

There’s no single “right” format. Your LOI should suit your deal. However, most UK LOIs cover the following:

1) Parties And Purpose

• Legal names of the parties and company numbers (if applicable).
• Short description of the opportunity or transaction you’re exploring.

2) Non-Binding Commercial Summary

• Key commercial points (for example, indicative price or pricing model, scope, territory, timeline, conditions precedent).
• A clear statement that these commercial terms are non-binding and subject to contract.

3) Process And Timetable

• Next steps, milestones and an indicative timetable to keep momentum.
• Due diligence scope and responsibilities (including how information will be provided).

4) Confidentiality

• Either reference an existing NDA or include a binding confidentiality clause that sets permitted use, access controls, and return/destruction of information.

5) Exclusivity (If Needed)

• Exclusivity period (for example, 30–90 days) where the other party agrees not to negotiate similar deals with others.
• Clear carve-outs and consequences if exclusivity is breached. For more context on this tool, see our guide to an exclusivity clause.

6) Non-Circumvention (If You’re Sharing Contacts)

• Protection against the other party bypassing you to deal directly with your suppliers, investors or clients. Read more about a non-circumvention clause and when to use it.

7) Costs

• Who pays their own costs and whether any third-party costs (for example, due diligence expenses) are shared or reimbursed.

8) Legal Housekeeping

• Governing law and jurisdiction (for example, the laws of England and Wales).
• Term and termination of the LOI (for example, confidentiality survives for a set period).
• Clarify that only the “Binding Clauses” section is legally binding.

If you do include “safety net” language for clarity, make sure it’s consistent across the document. Avoid conflicting phrasing that could confuse the status of the LOI. If you need to change terms during negotiations, do it in writing - our plain-English tips on amending contracts also apply when you update an LOI.

Letter Of Intent Template (UK) You Can Tailor

Here’s a simple, UK-focused letter of intent template to get you started. You can copy/paste this into your own document and adapt it to your deal. Remember: this is a general template and not legal advice - get tailored advice before you rely on it.

Subject To Contract

Letter of Intent

Date: 

Parties:
(1) , a company incorporated in  with company number [●] and registered office at [●] (Company A); and
(2) , a company incorporated in  with company number [●] and registered office at [●] (Company B).

1. Purpose (Non-Binding)
1.1 The parties intend to explore the following proposed transaction/opportunity (the “Proposed Transaction”): .
1.2 The parties agree the following key commercial points in principle (the “Indicative Terms”):
    (a) Scope/Assets/Services: [●]
    (b) Price/Pricing Model: [●]
    (c) Territory/Exclusivity of Supply (if any): [●]
    (d) Target Timetable: [●]
    (e) Conditions Precedent (if any): [●]
1.3 The Indicative Terms are non-binding and are subject to contract, due diligence and internal approvals. No binding agreement for the Proposed Transaction will exist unless and until a definitive agreement is executed by both parties.

2. Process And Timetable (Non-Binding)
2.1 The parties will proceed in good faith with the following steps and milestones:
    (a) Due diligence: 
    (b) Drafting of definitive agreement(s): 
    (c) Approvals and signing: 
2.2 Either party may cease negotiations at any time in its sole discretion.

3. Confidentiality (Binding)
3.1 Each party must keep the other party’s confidential information strictly confidential and use it solely to evaluate the Proposed Transaction.
3.2 Confidential information may be disclosed only to personnel and advisers who need to know it and are subject to confidentiality obligations at least as strict as these.
3.3 On request, each party will promptly return or securely destroy the other’s confidential information (subject to standard back-up retention and legal/regulatory requirements).

4. Exclusivity (Binding) 
4.1 From the date of this Letter until /[●] days (the “Exclusivity Period”), neither party will solicit, initiate or engage in negotiations with any third party regarding a transaction substantially similar to the Proposed Transaction.
4.2 Each party will promptly notify the other if it receives any unsolicited approach during the Exclusivity Period.

5. Non-Circumvention (Binding) 
5.1 Neither party will circumvent the other by dealing directly with the other party’s key contacts (listed in Schedule 1) regarding the Proposed Transaction without the other party’s written consent.

6. Costs (Binding)
6.1 Each party will bear its own costs in relation to this Letter and the Proposed Transaction unless otherwise agreed in writing.

7. Term And Termination (Binding)
7.1 This Letter (other than clauses 1 and 2) takes effect on the date above and continues until the earliest of:
    (a) execution of a definitive agreement; 
    (b) the parties agreeing in writing to end discussions; or
    (c) .
7.2 Clauses 3 (Confidentiality), 4 (Exclusivity) , 5 (Non-Circumvention) , 6 (Costs) and 8 (General) survive termination.

8. General (Binding)
8.1 Governing Law: This Letter and any non-contractual obligations arising out of or in connection with it are governed by the laws of England and Wales.
8.2 Jurisdiction: The courts of England and Wales have exclusive jurisdiction.
8.3 Entire Agreement: This Letter constitutes the entire understanding regarding its subject matter and supersedes prior LOIs about the same subject.
8.4 Status: Except for clauses expressly stated to be binding, this Letter is non-binding and subject to contract.

Signed for and on behalf of Company A:

Name:
Title:
Signature:
Date:

Signed for and on behalf of Company B:

Name:
Title:
Signature:
Date:

Schedule 1 – Key Contacts (Optional)

Customise this template to your context. For example, if you’re sharing sensitive information, you may prefer to attach or reference an existing NDA with more detailed safeguards. If you’re giving exclusivity, define what’s off-limits with precision so there’s no ambiguity about “similar transactions”.

Next Steps And Common Pitfalls

Once your LOI is signed, keep momentum with a clear plan and regular check-ins. A good LOI is a springboard - not a substitute - for a proper agreement. Here’s how to move forward and avoid common missteps.

Turn The LOI Into A Definitive Contract

• Start drafting early. Don’t wait until the exclusivity window is about to expire. Engage your team and, if needed, get a contract review to stress-test the key risks.
• Decide the right document type: supply agreement, services agreement, asset purchase agreement, shareholders’ agreement, or another tailored option. For complex deals, a bespoke contract drafted around your commercial model is usually best.
• If you need to adjust key terms mid-negotiation, memorialise changes in a short addendum to the LOI or exchange of letters and keep “Subject To Contract” on all draft communications.

Keep Binding And Non-Binding Provisions Clear

• Use headings like “Binding Clauses” and “Non-Binding Clauses” and repeat “Subject To Contract” in the header and signature block.
• Avoid conflicting wording. Phrases like “the parties agree to proceed” can look binding if not properly qualified. If you use drafting shortcuts or complex phrasing, be mindful of how they operate - our explainer on notwithstanding clauses shows how a single word can shift risk.

Protect Confidentiality And Data

• Use a robust NDA or ensure the LOI’s confidentiality clause is fit for purpose, especially if you’ll be sharing customer lists, pricing models or source code. If personal data is involved, align your processes with the UK GDPR and Data Protection Act 2018.

Be Precise With Exclusivity And Process

• Define the Exclusivity Period, what activities are restricted, and the consequences of breach. Consider carve-outs (for example, responding to unsolicited offers) where appropriate.
• Set out milestones and responsibilities clearly so the timetable is realistic and both sides stay accountable.

Use The Right Ancillary Tools

• For relationship clarifications that sit alongside a main contract, consider using side letters at signing rather than packing everything into the LOI.
• If you’ll need to adjust agreed terms later, follow a clean change process rather than relying on verbal understandings; the approach in our guide to amending contracts helps keep the record straight.

Don’t Over-Rely On Templates

• Templates are a great starting point, but every deal is different. A poorly adapted LOI can create confusion or unintended obligations. If the transaction is material to your business, it’s wise to get tailored input before you sign.

Key Takeaways

• A Letter of Intent helps you record the commercial outline, protect confidentiality and (if needed) secure exclusivity while you negotiate the definitive contract.
• Whether an LOI is binding depends on wording and intent. Use “Subject To Contract”, clearly separate non-binding commercial terms from binding protections, and avoid conflicting language.
• Include the essentials: parties and purpose, non-binding commercial summary, process and timetable, confidentiality, exclusivity and non-circumvention (if relevant), costs, governing law, and survival terms.
• Use the Letter of Intent template above as a base, but tailor it to your deal and risk profile. Pair it with tools like an NDA, Heads of Agreement or an investment term sheet where appropriate.
• Keep momentum after signing: move promptly to a definitive agreement and document any changes properly. Consider a professional contract review to make sure your final contract reflects your commercial intent and protects your business.

If you’d like help drafting or reviewing a Letter of Intent, NDA, Heads of Terms or the final contract, our friendly team can help you get protected from day one. You can reach us on 08081347754 or team@sprintlaw.co.uk for a free, no-obligations chat.