Startup & Investor

Letter of Intent

A Letter of Intent (LOI) signals a party's intention to enter into a formal agreement. Non-binding but sets out the key commercial terms for a deal, partnership, or acquisition.

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What this document covers

Both parties' details
Subject matter of the proposed agreement
Key commercial terms agreed
Due diligence requirements
Exclusivity period if any
Confidentiality of negotiations
Statement of which provisions are binding
Longstop date for executing the final agreement

Frequently Asked Questions

Is a Letter of Intent (LOI) binding in Kenya?
An LOI is typically non-binding — it signals intent without committing the parties to the final deal. However, specific clauses (exclusivity, confidentiality, cost sharing) can be stated as binding. Courts look at the language of the document to determine what was intended to be binding.
When should I use an LOI vs. a contract?
Use an LOI at the early stages of a negotiation to record heads of agreement and signal commitment while due diligence or final negotiations are ongoing. Use a full contract once all terms are agreed and you are ready to commit. An LOI bridges the gap between initial agreement and final execution.
Is an LOI enforceable internationally?
LOIs are recognised across all common law jurisdictions. The enforceability of specific clauses depends on the language used. Common law courts are consistent in looking at whether the parties intended to be bound — vague or aspirational language is not treated as binding.