Key takeaways
- A letter of intent to purchase records a buyer's serious intention to buy goods or services on outlined terms, before a full contract is signed.
- Most of it is not binding. Confidentiality, exclusivity and costs clauses may be.
- Say plainly which parts bind and which do not.
- A letter of intent is not a purchase order. It does not authorise delivery or payment.
Free PDF and Excel: Letter of intent to purchase outline and binding clause check. Get it below
What it is
A letter of intent to purchase is a written statement from a prospective buyer that it intends to buy goods or services from a seller on the terms outlined, subject to a final agreement.
Buyers use one to show seriousness, to help the seller line up production or financing, or to reserve capacity while the contract is negotiated. It sits earlier in the chain than a purchase agreement and well before a purchase order, which is covered in the site's purchase order guide.
A hospital group tells a device maker it intends to buy 200 units over two years, at a price range, subject to a trial and a final contract. The letter says it is not binding except for confidentiality and for a 60-day period in which the maker will not offer the same terms to a rival.
The maker uses the letter to book component supply. The hospital group is not obliged to buy if the trial fails.
What to include
- Parties and date.
- A description of the goods or services and expected quantities.
- Price or pricing method, marked as indicative.
- Conditions before a final contract: trials, approvals, financing.
- A target date for the definitive agreement.
- Which clauses are binding, such as confidentiality, exclusivity, costs, governing law.
- A statement that the rest is non-binding.
- Signatures.
Free PDF and Excel
Letter of intent to purchase outline and binding clause check
A letter outline with a table to mark which clauses bind and which do not.
- Letter outline
- Binding clause check
- Condition list
- Excel deal tracker
Risks
| Risk | How to reduce it |
|---|---|
| Read as a binding contract | State clearly that it is not, and avoid wording like "will purchase" without conditions |
| Supplier relies on it and spends money | Say who bears costs if the deal fails |
| Exclusivity without a time limit | Set an end date |
| Confidential information leaks | Include or attach an NDA |
- Binding and non-binding parts are marked.
- Conditions are listed.
- An end date is stated.
- Confidentiality is covered.
- Counsel has reviewed it.
Last checked: 19 October 2026. General information, not legal advice. The effect of a letter of intent depends on its wording and governing law.
Frequently asked questions
What is a letter of intent to purchase?
A written statement of a buyer's plan to buy on outlined terms, subject to a final contract.
Is a letter of intent legally binding?
Mostly not, but specific clauses such as confidentiality can be. The wording and governing law decide.
How is it different from a purchase order?
A purchase order is an offer to buy that becomes binding on acceptance. A letter of intent is an earlier, usually non-binding statement.
Do I need a lawyer?
For large deals yes, since the wording can create obligations you did not intend.
How long should a letter of intent last?
Set an end date, commonly 30 to 90 days, to match the time needed to finalise the contract.