Spring, TX asked in Contracts and Business Law for Texas

Q: Is there a difference between a Letter of Intent and a Purchase Agreement?

Can a Letter of Intent be used as a Purchase Agreement?

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1 Lawyer Answer
John Michael Frick
John Michael Frick
  • Frisco, TX
  • Licensed in Texas

A: A letter of intent is customarily a non-binding instrument outlining the major terms of a contemplated transaction.

A purchase agreement is customarily a binding contract containing a complete and detailed agreement as to all aspects of a transaction.

It would be difficult to "use" a letter of intent "as" a purchase agreement. A letter of intent is customarily a starting point from which the parties develop a more comprehensive and detailed purchase agreement.

I won't say it's impossible, but I've never seen it attempted. If the transaction were simple enough, there would be no reason for a letter of intent at all and the parties would simply prepare a purchase agreement. That happens frequently.

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