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The Commercial Letter of Intent (LOI) is a crucial pre-contractual document used in Indian business transactions to establish preliminary understanding between parties before entering into a detailed, binding agreement. It serves multiple purposes: documenting initial business terms, setting negotiation parameters, and establishing certain binding obligations like confidentiality and exclusivity. Under Indian law, particularly guided by the Indian Contract Act, 1872, LOIs must be carefully drafted to maintain their non-binding nature while clearly identifying which provisions are intended to be binding. The document is commonly used in mergers and acquisitions, joint ventures, major commercial transactions, and strategic partnerships. It typically precedes comprehensive due diligence and the execution of definitive agreements, providing a structured framework for negotiations while protecting both parties' interests during the preliminary stages of a business transaction.

1. Letter Header: Date, recipient details, and subject line clearly indicating this is a Letter of Intent

2. Introduction: Opening paragraph identifying the parties and expressing interest in entering into a business relationship

3. Transaction Overview: Brief description of the proposed transaction or business relationship

4. Key Commercial Terms: Essential business terms including proposed pricing, scope, and timeline

5. Due Diligence: Process and timeline for conducting due diligence if required

6. Exclusivity Period: Timeframe during which parties agree to negotiate exclusively with each other

7. Confidentiality Statement: Statement regarding the confidential nature of discussions and information shared

8. Non-Binding Nature: Clear statement that the LOI is non-binding except for specific provisions

9. Next Steps: Outline of the process moving forward, including timeline for definitive agreement

10. Closure: Signature blocks and formal closing of the letter