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How to Write a Letter of Intent (LOI)

Follow these steps to draft a Letter of Intent (LOI) that survives counterparty review, bank scrutiny and, if needed, ICC arbitration. Grab the free Letter of Intent (LOI) template at the end.

Step-by-step

  1. 1. Buyer identification
    Legal name, address, registration number, authorised signatory and title. Include company stamp if used in your jurisdiction.
  2. 2. Commodity & grade
    Name the commodity and grade (e.g. Russian Export Blend Crude, Colombian Steam Coal 6300 NCV, Anode-grade Petcoke).
  3. 3. Quantity & schedule
    Trial quantity, contract quantity, delivery cadence (monthly lifts) and total contract volume in metric tonnes or barrels.
  4. 4. Discharge port & Incoterms
    State the discharge port and Incoterms 2020 rule (CIF ASWP is typical for LOI). Add safe berth clause.
  5. 5. Target price & payment
    State target price basis (flat or index-linked) and payment instrument: MT700 irrevocable LC at sight, from a top-50 world bank.
  6. 6. Banking coordinates
    Issuing bank name, SWIFT, officer and phone. Attach RWA if you want a fast FCO in return.
  7. 7. Validity & next step
    State LOI validity (5-10 banking days) and the commitment to proceed to FCO within that window.

Common pitfalls to avoid

  • Leaving placeholder text like [ ] or {seller name} in the executed copy.
  • Missing signature date, or signing outside the validity window quoted on the document.
  • Referencing Incoterms without the year - always cite 'Incoterms 2020'.
  • Omitting the arbitration seat and governing law - defaults vary by country.
Free template
Free Letter of Intent (LOI) Template
Download a free Letter of Intent (LOI) template for commodity buyers. Editable Word and PDF format with banking coordinates, quantity, delivery and payment sections.
Get the template

FAQ

Is an LOI legally binding?
No. It is a non-binding statement of intent, but any bank coordinates and buyer details in it must still be accurate.
Should the LOI mention commission or IMFPA?
No. Fee protection belongs in a separate NCNDA/IMFPA between the intermediaries, not in the buyer's LOI to the principal seller.

Other how-to guides

How to Write a Sales & Purchase Agreement (SPA)How to Write a Irrevocable Corporate Purchase Order (ICPO)How to Write a Full Corporate Offer (FCO)How to Write a Soft Corporate Offer (SCO)How to Write a Non-Disclosure Agreement (NDA)How to Write a NCNDA (Non-Circumvention, Non-Disclosure)How to Write a IMFPA (Irrevocable Master Fee Protection)How to Write a NCNDA + IMFPA (Combined)