Sample Letter Of Intent (LOI) Template In The UK: What To Include

If you’re negotiating a deal - buying a business, onboarding a key supplier, partnering with another company, or lining up investment - a clear Letter of Intent (LOI) keeps everyone on the same page.

Think of it as a practical roadmap for the deal. It captures what you’ve agreed in principle, helps avoid misunderstandings, and sets ground rules while you finalise the formal contracts.

In this guide, we’ll explain what an LOI is under UK law, which parts can be binding, how to draft one step-by-step, and provide a sample Letter of Intent you can tailor to your situation. We’ll also flag common pitfalls and when it’s smarter to use a different document.

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

A Letter of Intent (LOI) is a document that outlines the main terms the parties expect to include in a final agreement. It’s typically used early in negotiations to confirm “we’ve got a deal in principle” - without committing to every legal detail yet.

In small business, you’ll see LOIs used across a range of scenarios:

• Buying or selling a business or assets (often before a Business Sale Agreement or Share Sale Agreement)
• Joint ventures, collaborations or new distribution relationships (before a Heads of Agreement or full commercial contract)
• Term sheets for investment rounds (sometimes a separate Term Sheet makes more sense)
• Key supplier deals or exclusive negotiations
• Property-related moves (e.g. agreeing high-level terms before a lease or an assignment of a lease)
• Licensing of intellectual property or brand partnerships

Why use an LOI? It helps you:

• Document what’s been agreed so far (scope, price, timelines)
• Reduce the risk of “deal drift” while lawyers draft final contracts
• Set rules for the negotiation period (exclusivity, confidentiality, process)
• Give stakeholders (directors, lenders, investors) a clear summary before approving the next step

Importantly, an LOI is not a replacement for proper contracts. It’s a stepping stone. The goal is to align on the key terms and the process for getting to the formal agreement - not to cover every scenario and risk. You’ll still want professionally drafted contracts to protect you once you move beyond the “in principle” stage.

Is A Letter Of Intent Legally Binding In The UK?

An LOI can be fully non-binding, partially binding, or in some cases treated as binding - it depends on the wording, context and behaviour of the parties under English law.

Here’s how to approach it:

• Use clear non-binding language: If you want the commercial terms to be “in principle” only, state that explicitly and mark the LOI “Subject to Contract”.
• Carve out specific binding clauses: It’s common to make certain clauses binding even when the rest is non-binding, such as confidentiality, exclusivity/no-shop, governing law, costs, and good faith process obligations.
• Avoid accidental binding: Ambiguous wording, conduct that looks like final agreement, or starting performance too early can increase the risk of a court finding a binding contract exists. Be explicit about conditions (e.g. satisfactory due diligence, board approval, finance approval) and don’t start performing key obligations until the final contract is signed.

Key UK legal principles to keep in mind:

• Intention to create legal relations: Courts will look at the language used, the context, and conduct. “Subject to Contract” is a strong signal the parties do not intend to be bound until a final agreement is signed.
• Certainty of terms: A document with all essential terms, agreed and unconditional, is more likely to be treated as binding. Keeping your LOI at “high level” can help avoid this if non-binding is your intention.
• Misrepresentation: Statements made in or around the LOI that are inaccurate can trigger claims under the Misrepresentation Act 1967. Stick to what you can stand behind and qualify forward-looking statements appropriately.
• Confidentiality and data protection: If your LOI includes or anticipates sharing personal data, you still need to comply with the UK GDPR/Data Protection Act 2018 and, where appropriate, use a proper Non-Disclosure Agreement and data-sharing safeguards.

Bottom line: spell out which provisions are binding and which aren’t. Many businesses choose a non-binding LOI with specific binding carve-outs to manage risk during negotiations.

How To Write A Letter Of Intent: Step-By-Step

Drafting your LOI is about striking the right balance: enough detail to align expectations, not so much that you “accidentally” create a binding final contract. Here’s a practical structure that works for most deals.

1) Add The Essentials Up Front

• Parties: Full legal names and company numbers (if applicable)
• Purpose: A short description of the proposed transaction or relationship
• Status: A clear statement that the LOI is non-binding (except for defined clauses), and “Subject to Contract”

2) Outline The Key Commercial Terms

Summarise what you’ve agreed in principle. Tailor this to your deal:

• Business or asset purchase: headline price, what’s included, price adjustments, completion target date, key conditions (e.g. finance, landlord consent, due diligence)
• Share sale: number/class of shares, price or valuation methodology, completion mechanics, warranties headline list - and a nod that the final Share Sale Agreement will contain detailed terms
• Supply/distribution: product scope, territory, exclusivity, minimums, term length, pricing principles
• Collaboration/joint venture: scope of project, roles, contributions, ownership of IP created, revenue share framework, governance approach
• Property: rent/premium, term, break options, assignment/licence terms, key landlord conditions
• Investment: instrument type, amount, valuation method, investor rights - or consider using a separate Term Sheet

3) Protect Confidentiality And Relationships

• Confidentiality: Either include a brief confidentiality clause (binding) or reference an existing NDA that will govern the exchange of information.
• Exclusivity: If you want a “no-shop” period (the other side won’t negotiate with others), set a clear timeframe and scope. Make this binding with reasonable limitations.
• Non-circumvention: In introductions-heavy deals (e.g. sales agency, brokers), consider whether a short non-circumvention undertaking is appropriate, or plan to address this expressly in the final contract using non-circumvention clauses.

4) Set The Process And Timelines

• Due diligence: scope and timeline, access to information and sites, cooperation commitments
• Approvals: internal approvals, landlord/third-party consents, regulatory permissions (if any)
• Drafting responsibility: who prepares first drafts of the formal documents (e.g. Business Sale Agreement, supply agreement, licence)
• Target dates: key milestones and target completion date (realistic, with room for diligence)

5) Add Practical Legal Boilerplate (Mostly Binding)

• Binding/non-binding split: a clear clause stating which provisions are binding (e.g. confidentiality, exclusivity, costs, governing law, dispute resolution) and that the rest are non-binding.
• Governing law and jurisdiction: typically the laws of England and Wales, with courts of England and Wales (or arbitration if agreed).
• Costs: each party bears its own costs unless stated otherwise.
• No obligation to proceed: you’re not obliged to complete unless and until definitive agreements are signed.
• Validity/expiry: LOI lapses after a set period if not superseded by a final contract.
• Signatures: authorised signatories and dating. If one party is a company, make sure the signatory has authority to sign (see our guidance on an employee’s capacity to bind a company).

As with any legal document, avoid relying on generic templates alone - they can miss key risks specific to your deal. A short, tailored document prepared by a lawyer will almost always save time and protect you better than a one-size-fits-all form.

Sample Letter Of Intent (UK)

Use the template below as a starting point. Make sure you tailor it to your transaction and get legal advice before you sign or share it.

SUBJECT TO CONTRACT

To:  (Company No. [●])
Address: [●]

Re: Letter of Intent – Proposed 

1. Parties
This non-binding Letter of Intent (LOI) is between:
(a)  (Company No. [●]) of  (Buyer/Party A); and
(b)  (Company No. [●]) of  (Seller/Party B).

2. Purpose
The parties wish to set out key terms agreed in principle regarding the proposed  (the “Transaction”), subject to contract and satisfactory due diligence.

3. Headline Commercial Terms (Non-Binding)
(a) Scope:  business assets of [●] including , excluding ].
(b) Price/Consideration: [£●] , subject to .
(c) Payment: , with .
(d) Conditions: The Transaction is conditional on , , , and .
(e) Target Timeline: , , .
(f) Key Obligations: .

4. Due Diligence (Binding Only Where Stated)
(a) Access: Seller will provide reasonable access to non-public information, premises and key personnel for the purposes of due diligence, subject to confidentiality.
(b) Data Protection: Each party will comply with applicable data protection laws and will not disclose personal data beyond what is necessary for due diligence.

5. Confidentiality (Binding)
The parties will keep confidential the existence and terms of this LOI and all information exchanged, except where disclosure is required by law, regulation or professional advisers bound by confidentiality.  the separate Non‑Disclosure Agreement between the parties dated [●].

6. Exclusivity (Binding) 
From the date of this LOI until [●] (the “Exclusivity Period”), Seller will not solicit, initiate or continue negotiations with any third party regarding the sale of  without Buyer’s written consent.

7. Costs (Binding)
Each party will bear its own costs in relation to the Transaction and this LOI.

8. No Obligation to Proceed (Binding)
Except for the clauses expressly stated as binding, this LOI does not create any obligation on either party to proceed with the Transaction or to enter into any definitive agreement.

9. Governing Law (Binding)
This LOI and any non-contractual obligations arising out of or in connection with it are governed by the laws of England and Wales. The courts of England and Wales have exclusive jurisdiction.

10. Expiry
This LOI will expire on [●] unless extended in writing or superseded by a definitive agreement.

If you agree to the above terms, please sign below.

Signed for and on behalf of
                                    Date: [●]
Name:
Title:

Signed for and on behalf of
                                    Date: [●]
Name:
Title:

Optional add-ons (consider whether these should be binding):

• Non-solicitation of employees for a limited period
• Process/timetable undertakings (e.g. “parties will use reasonable endeavours to negotiate in good faith”)
• Exclusivity break fees (if appropriate and lawful)
• Restrictions on announcements/PR

Remember: the more detailed and unconditional your commercial section becomes, the greater the risk a court could view it as a binding contract. Keep it high-level, include “Subject to Contract” at the top, and specify which clauses are binding.

Common Pitfalls, Alternatives And Next Steps

LOIs are simple on the surface, but a few common mistakes can create big headaches. Here’s what to watch out for, plus alternatives that might suit you better.

Common Pitfalls

• Accidental binding: Vague non-binding wording, missing “Subject to Contract”, or starting performance can tip the balance towards enforceability. Be explicit.
• Over-sharing without safeguards: If you’re swapping sensitive information, use a proper NDA and consider data protection protocols for due diligence (data rooms, access limits, redactions).
• Unclear exclusivity: If you need exclusivity, define its scope (what’s covered), duration, and carve-outs (e.g. responding to unsolicited offers, legal obligations). Overly broad restrictions can be hard to enforce.
• Missing conditions: If your deal depends on finance, landlord consent, or internal approvals, say so. Conditions reduce the risk of being pushed to complete before you’re ready.
• Silence on costs and process: Spell out who drafts which document, target dates, and that each party pays their own costs. Avoid assumptions.
• IP ownership gaps: In collaborations, state the intended ownership of new intellectual property, and confirm the final agreement will include comprehensive IP terms. A short LOI note can prevent disputes later.

Useful Alternatives (When An LOI Isn’t The Right Tool)

• Heads of Agreement: If you want a more detailed roadmap (and potentially more binding elements), a concise Heads of Agreement can suit complex commercial relationships.
• Term Sheet: For investment or financing, a focused Term Sheet is often the market-standard document.
• Memorandum of Understanding (MOU): Functionally similar to an LOI; the key is how it’s drafted. The label matters less than the wording - see our plain-English breakdown of MOU vs Contract.
• Go straight to contract: In some cases, moving directly to a definitive agreement is fastest (for example, a short-form supply agreement or a full Business Sale Agreement if the deal is already settled in principle).

What Happens After The LOI?

Once the LOI is signed, the real work begins:

• Due diligence: Financial, legal, operational, IP and data protection checks within the agreed period.
• Contract drafting: Your lawyers will prepare and negotiate the definitive agreements (for example, a business sale contract, a licence, a supply agreement, or a Share Sale Agreement for a share deal).
• Third-party consents: Landlord, lender, key customer or supplier consents if needed.
• Signing and completion: Satisfy conditions, sign the definitive documents, and complete the transaction.

If your deal involves ongoing trading arrangements, it’s also wise to line up the operational legals you’ll need post-completion - for instance, robust Terms of Trade, a Data Processing Agreement if you’ll handle personal data, and any sector-specific compliance documents. Where relationships involve introductions or sales channels, plan for protections like appropriate non-circumvention wording within the final agreement rather than relying on the LOI alone.

If this all sounds like a lot, don’t stress - setting up your legal foundations early will save you time and reduce risk as the deal progresses.

Key Takeaways

• A Letter of Intent is a practical way to record an “in principle” deal, align expectations, and set negotiation ground rules while you finalise the definitive contracts.
• Under UK law, an LOI can be non-binding, partially binding, or binding depending on the wording and conduct. Use “Subject to Contract” and clearly mark which clauses (e.g. confidentiality, exclusivity, costs, governing law) are binding.
• Keep commercial terms high-level in the LOI and include appropriate conditions (due diligence, approvals, finance). Avoid starting performance until the final contract is signed.
• Protect your position during negotiations with the right tools: an NDA for information sharing, a Heads of Agreement or Term Sheet where appropriate, and a solid definitive contract such as a Business Sale Agreement or Share Sale Agreement.
• Be mindful of UK GDPR/Data Protection Act duties during due diligence. If personal data is involved, limit and protect access, and use appropriate contractual safeguards.
• Generic templates can create risk if they don’t match your deal. A tailored LOI and well-drafted final agreements will protect your business and keep the transaction moving.

If you’d like help preparing or reviewing a Letter of Intent - or you’re ready to move straight to drafting the definitive agreements - you can reach our friendly team on 08081347754 or team@sprintlaw.co.uk for a free, no-obligations chat.