Letter of Intent
A document, usually in the form of a letter agreement, confirming two (or more) parties' intentions to pursue and effect an investment (or acquisition) transaction. It summarizes the material intended terms of the deal, and serves as the basis for (and triggers the start of) substantial due diligence and the preparation of draft definitive agreements. By its terms, a letter of intent is (generally) not legally binding, except that it may include certain binding and enforceable provisions, such as those addressing confidentiality, no-shop agreements, and provisions regarding fees and expenses). Sometimes also referred to as a term sheet (and, to a lesser extent, a memorandum of understanding or agreement in principle).