Writing a Business Partnership Letter of Intent

 A letter of intent outlines the intent of one party in relationship to another. A business partnership letter of intent is commonly used as an initial proposal to form a business partnership with another party that precedes a written contract of agreement.

The letter is not a required element of a business deal and is not a binding contract, but it can help clarify the details of the proposal so that both parties enter negotiations with the same basic understanding. When two parties are considering doing business with each other, one or both parties can write a letter of intent. It is considered a good way for the parties involved to learn the desires of the other party and get an idea of how they will do business together.​

The aim is to get a commitment that is not a binding commitment. It clarifies key points, states what type of commitment is required such as merger, joint venture or partnership, and provides safeguards in the event the negotiations collapse. However, if the letter is not written correctly, it can be considered legally binding. For this reason, it is recommended to either consult a lawyer or make sure the letter has the right legal language.

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​A business partnership letter of intent should clearly state:

    Whether or not both parties are considered accountable for the contents of the letter. If both parties agree that the letter is binding, then the actual contract cannot contradict anything stated in the letter of intent.

    The basic scope of the partnership should be described in the first paragraph. This includes the type of business, basic terms, length of contract and any other essential terms. It is not necessary to give every detail of the business but should give the big picture.

    The terms and conditions to which both parties have already agreed such as how the profits will be split.

    The party who is writing the letter should clearly explain his or her perspective of the ideal partnership agreement. This may be up for negotiation later, and the party will probably not get everything they want.

    Any previous disagreements should be mentioned as not finalized and still in negotiation.

    A date and time should be given to resolve any dispute, and the steps to take if a resolution is not reached.

    The statement of intent should be clear along with an expression of desire to create the business partnership. The next steps to solidify the partnership should be mentioned.

Before sending a letter of intent, it is recommended to have it reviewed by a lawyer to make sure it doesn’t contain any legal risks. There are state laws that may apply especially if the two parties live in different states.

Here is a sample of a business partnership letter of intent. If the letter is going to a business, it should be addressed to the proper person in that business. It should be sent by certified mail, so the sender has proof of the time and date the letter was received.

Sample Business Partnership Letter of Intent

COMPANY LETTERHEAD IF APPLICABLE

Name of Sender

Name of Sender’s Business if applicable

Address of Sender

City, State, Zip Code

DATE

Name of Receiver

Name of Receiver’s Business if applicable

Address of Receiver

City, State, Zip Code

Dear Name of Receiver,

This is a Letter of Intent that proposes to outline the partnership you and I discussed on DATE. I do not consider the terms and conditions stated in this letter as binding and am open to negotiation.

We have agreed that we will enter into partnership for the purposes of starting a catering service. My main responsibility will be food preparation and purchasing, and your responsibility will be accounts and marketing. We will pay ourselves and our employees a suitable salary and split any profits after salaries 50-50. We are still negotiating the amount of salaries.

We have also agreed to take out a Small Business Loan to cover the start-up expenses and will both be signatory for that loan. We have together created a business plan that clearly states our intentions for the short-term as well as the next five years, and this plan has been approved by the bank.

I propose we meet in two weeks on DATE at the office of Name of Lawyer to confirm the salaries and sign a contract of partnership. We can meet at a time of your convenience to discuss the points on which we have not yet agreed before we meet the lawyer. Please call me at 555-123-4567 or contact me at Name@email.com to set up a meeting.

This letter is a formal expression of intent to start a partnership with you to open a catering service. We need to decide the main points of financial distribution and meet the lawyer to sign the contract.

Sincerely,

Signature of Sender

Printed Name of Sender