Key Takeaways

  • A non binding letter of intent (LOI) outlines key deal terms without forming a binding contract.
  • Courts examine both intent and actions after signing to determine enforceability.
  • Even a “nonbinding” LOI can include binding provisions such as confidentiality or exclusivity clauses.
  • Proper wording is crucial—avoid phrases that imply acceptance or agreement.
  • A well-structured non binding letter of intent template (Word format) should clearly state which provisions are binding and which are not.
  • Nonbinding agreements such as LOIs, term sheets, and MOUs are valuable negotiation tools but must be drafted carefully to avoid unintended legal obligations.

The difference between letter of intent and statement of purpose in education or employment is that the letter of intent is an outline, while the statement of purpose is more detailed and requires substantial research.

Statement of Purpose

When you are applying to a university, a Statement of Purpose, or SOP, is a way to create a connection between your history and future plans. Creating the statement requires significant research about the specifics of both the degree program and university you have interest in applying to. Building a link between the past and present requires you to:

  • Review your past and present experiences.
  • List instances that match the direction of the degree program.
  • Show how these experiences will positively impact your future success in the degree program.

In some degree programs like MBA or Master's, this level of research is not necessary, as the area of interest in a particular field is already known. If a particular of interest is already known, it can be added to the statement of purpose as long as it is realistic in nature.

When writing the statement, follow these steps:

  • Complete all research.
  • Write the statement of purpose like a story.
  • Include the motivation for your interest in higher education.
  • Include facts without over embellishment.
  • Keep to the word limit if one is given, or stop at 1,000 words.
  • Avoid overusing words to the point that the statement sounds like a thesaurus.
  • Never commit plagiarism.

The statement should be fluid and easy to read, and it should include statements supported by facts. As a prospective candidate, be sure to show that your intent is serious in nature. If a Statement of Purpose is for employment, the focus should be a look into possible future work.

Cover Letter

A cover letter is a document sent alongside a resume when applying for a specific job opening. Unlike a Statement of Purpose, which focuses on long-term goals, or a Letter of Intent, which expresses general interest, a cover letter is targeted and tailored to the immediate requirements of a posted position.

When writing a cover letter, applicants should:

  • Address the hiring manager directly whenever possible.
  • Highlight specific skills and experiences that align with the job description.
  • Demonstrate knowledge of the employer’s organization and needs.
  • Keep the letter concise, usually one page, and avoid repeating the resume verbatim.
  • End with a call to action, such as requesting an interview or expressing enthusiasm to discuss qualifications further.

The purpose of a cover letter is to show why you are the ideal candidate for a particular role at a particular company. This makes it different from a Letter of Intent, which may be broader or submitted even when no position is formally listed.

Letter of Intent

A Letter of Intent, or LOI, is used to show an outline of an agreement or intention. In general terms, a letter of intent is a non-binding proposal to another party. When a student is applying to a college, or a particular program, the letter should list the following:

  • The applicant's intended course of study.
  • The timeframe that will be expected to complete the program.

The letter should also include the following:

  • An introduction to the applicant.
  • An outline to explain the applicant's interest in the organization.
  • A list of all relevant skills and credentials.

When writing a letter of intent for employment, think of the letter as a sales pitch to show off the applicant's skills and abilities. The letter is usually written and sent when a prospective employer has shown interest in a candidate. The prospective employer can then use the letter as a way to see if the candidate should to the interview stage. The letter is an important tool and should be a way to help the candidate stand out from the rest of the candidates who have submitted applications.

When drafting the letter, follow these important steps:

  • Address the letter to a specific person to create a connection with the reader. Do not use a general title or "To Whom It May Concern."
  • The first paragraph should be a summary that includes a personal introduction and why you are applying.
  • Mention your qualifications in a sentence or two to show why you are the right candidate for the position.
  • The conclusion should include a request for a response to the letter.

Technically speaking, the letter should include the following:

  • Follow proper business letter format.
  • Use simple fonts like Arial or Courier New.
  • Use 12 point font size. Do not use anything larger.
  • Use black ink. No other color will be seen as acceptable.
  • Use plain white paper that is 20- or 24-pound weight.
  • If possible, use a laser printer to avoid ink smudges.
  • Write the letter in a formal manner.
  • Slang, offensive remarks or trite sayings should not be used.
  • Do not include personal information, including the following:
    • Age.
    • Social Security Number.
    • Marital Status.
    • Hobbies.
    • Social activities.
  • Never lie about any credentials, education, or experiences.
  • Never use more than one page for the letter of intent.

When the letter is completed, a third party should review the letter for spelling and grammatical errors. The third party should also confirm that the letter is cohesive and shows a clear vision.

Sample Non Binding Clause Language

To preserve nonbinding status, the following sample clause can be adapted within a Word template:

“This letter, though not binding, is intended solely as a basis for negotiating a final written agreement that will contain material terms not mentioned here. Neither party is obligated to continue negotiations, and either may terminate discussions at any time in its sole discretion. Partial performance, due diligence, or communications by either party shall not be deemed evidence of an intent to be bound until a definitive agreement is executed by both parties.”

This type of clause underscores that no legal obligations exist until a final contract is signed.

Key Elements in a Non Binding Letter of Intent Template (Word)

When preparing a non binding letter of intent template in Word, include specific sections to make the intent unmistakably clear:

  • Introduction: Identify the parties and the purpose of the LOI.
  • Proposed Transaction Terms: Summarize main deal points such as price, structure, or key conditions.
  • Nonbinding Statement: Clearly declare that the LOI does not create any binding obligations, except where explicitly stated.
  • Binding Clauses: Identify limited clauses that are enforceable, such as confidentiality, exclusivity, or governing law provisions.
  • Discretion to Terminate: Reserve the right for either party to terminate negotiations at any time and for any reason.
  • Signature Section: Provide space for the parties to sign, signaling good-faith interest without creating a contract.

This structure ensures the document remains a negotiating framework rather than an enforceable agreement.

Understanding Non Binding Letters of Intent

A non binding letter of intent (LOI) expresses the parties’ intent to move toward a potential deal without creating an enforceable contract. However, labeling a document “nonbinding” is not enough to guarantee that courts will treat it that way. Judges typically look at two factors when evaluating an LOI’s enforceability:

  1. Intent, as expressed in the document’s wording; and
  2. Actions taken after the letter is signed

If the document’s language or conduct between parties implies an agreement, courts may determine the LOI to be binding even if it explicitly states otherwise. To avoid this, parties should take care to use language that does not indicate acceptance, commitment, or an obligation to proceed.

Letter of Intent vs Cover Letter

When comparing a letter of intent vs cover letter, the main distinction is context and timing.

  • Letter of Intent (LOI): Often used when no specific opening is advertised, but the applicant wants to express interest in an organization or program. It can also outline the terms of an agreement or show commitment to pursue a certain path. LOIs are broader and may highlight values, goals, and qualifications without being tied to a posted role.
  • Cover Letter: Always tied to a specific job posting. It focuses narrowly on why the applicant fits the advertised role, often referencing exact requirements listed in the job description.

Key Differences:

  • Purpose: LOI communicates intent and interest; a cover letter argues for immediate suitability.
  • Timing: LOI can be unsolicited; a cover letter is submitted in response to a job opening.
  • Tone: LOI may be more exploratory; a cover letter is persuasive and role-specific.
  • Audience: LOI may address a hiring manager, admissions officer, or committee; a cover letter addresses a recruiter or employer for a single job.

Understanding the differences ensures applicants use the correct document for the right situation, strengthening their chances of success in both educational and employment contexts.

Legal Risks and Drafting Tips

Even an LOI described as nonbinding can create legal exposure if drafted carelessly.To ensure your letter remains nonbinding:

  1. Avoid language implying agreement, such as “accept,” “offer,” or “agree.”
  2. Clarify that no deal exists until a definitive written contract is signed.
  3. Do not include “good faith” obligations unless you intend to be held to them, as courts may interpret these as enforceable promises.
  4. Reiterate nonbinding intent in communications (including email exchanges) to prevent implied acceptance through electronic correspondence.

A non binding letter of intent template in Word helps streamline these steps—offering editable, reusable formatting while allowing tailored nonbinding language to protect both parties.

Binding vs Non Binding Provisions in Practice

A non binding LOI is often a hybrid document: most deal terms are nonbinding, but select provisions—like confidentiality or no-shop clauses—are enforceable in court. This hybrid nature allows the parties to maintain flexibility while protecting sensitive information.

Common binding provisions may include:

  • Confidentiality Clause: Prevents either party from disclosing deal discussions.
  • Exclusivity (No-Shop) Clause: Prevents the seller from negotiating with others for a set period.
  • Governing Law and Dispute Resolution: Defines how disagreements will be handled.

If omitted or ambiguously worded, these provisions may lead to confusion about the document’s enforceability. Including clear, separate sections labeled “Binding” and “Nonbinding” helps prevent disputes.

Frequently Asked Questions

  1. What is a non binding letter of intent?
    A non binding letter of intent outlines preliminary terms of a potential transaction but does not legally require the parties to complete the deal.
  2. Can a non binding letter of intent become binding?
    Yes. Courts may interpret an LOI as binding if the language or conduct of the parties suggests intent to be bound.
  3. What clauses in an LOI are typically binding?
    Clauses related to confidentiality, exclusivity, or governing law may be binding even in a nonbinding LOI.
  4. Why should I use a non binding letter of intent template in Word?
    A Word template ensures consistency, allows quick edits, and helps maintain clear legal formatting for nonbinding language.
  5. Should I consult a lawyer before sending a letter of intent?
    Yes. Legal counsel can ensure the LOI’s wording accurately reflects your intent and prevents inadvertent creation of binding obligations. You can find qualified business attorneys on UpCounsel for guidance.

If you need help with understanding the difference between a letter of intent and statement of purpose, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.