down and write a letter of intent to buy the empire state building and it would be, utterly non binding. Why? Because my intent can change. I intend to buy the Empire state building, but who cares what my Intent is? Many traders and Brokers treat a Letter of Intent as if it were holy writ. This is a critical beginner's mistake. As its name indicates _ this document expresses an intent.
Corporations and many other businesses can use this type of letter as a precursor to a formal agreement. In it they can list the salient points of their intentions and what they intend to include in formal contractual agreement if both parties can come to an amicable agreement. Thus it can be used as a fall back document should any questions arise during the final contract negotiations. A good example of this might be a letter sent to a company's investor explaining their intentions to buyout another company and what it is expected to do to the value of their stocks.