Offer to Purchase Or Letter of Intent. Both terms are used to describe an offer made to purchase a business. An over_simplification of the definition of both documents is: An Offer to Purchase is usually written in contract form and defines the price, terms and conditions of the sale, and is usually accompanied by an earnest money deposit. A Letter of Intent (LOI) is usually written in letter form and also defines the price and the terms and conditions but usually doesn't call for an earnest money deposit.
The LOI as it is now used is a misunderstood application of poorly informed brokers and traders. A more proper application based on established custom and practice in International trade, going back even to the old medieval "Law Merchant" (Lex Mercantilis) isɅ. Buyer requests a quotation _ in modern usage this is an RFQ/Request For Quotation _ NOT an LOIǎ. Seller may then reply with a Quote. Buyer confirms receipt of quoted prices, and requests an OfferǏ. Seller replies with an offer (the firm or full offer is the so_called "FCO" in Internet Broker_speak).