Purchase (Products/Services) Letter of Intent

A letter of intent to purchase products or services is a letter stating the writer’s intention to buy products or services from a vendor. A buyer might write this letter of intent to demonstrate his seriousness about purchasing a product or service from a vendor. These letters are usually nonbinding agreements. After both parties agree to the terms of the letter, they might formalize the agreement with a contract, usually in the form of a purchase order.

This article discusses letters of intent to purchase, purchase orders, and what to include in your letter of intent to purchase products or services. We have included a format you can use to write your letter and a sample letter for you to read.

Letters of Intent to Purchase

A buyer might write a letter of intent to purchase to signify his intention to purchase real estate, businesses, products, services, or stocks. Their letter of intent may include a deadline that limits the time frame by which the vendor needs to agree to the terms of the letter.

Letters of intent to purchase are generally nonbinding. They serve only to assist in creating a formal agreement such as a purchase order. However, the writer should signify whether the terms are binding or nonbinding in the letter of intent. This statement can prevent misunderstandings and potential lawsuits.

Purchase Orders

A purchase order is a professional document that a buyer sends to a vendor. Purchase orders indicate the type of product or service purchased, the quantity of each product, and the delivery date(s). They also include the payment details. These details help the buyer keep track of spending and help the vendor keep track of sales amounts.

The buyer signs the purchase order and sends it to the vendor, who approves the sale and arranges delivery of the products or services. Purchase orders are legally binding contracts.

What to Include in Your Letter

  • The Effective Date – This is the date you write your letter of intent.
  • A Subject Line – A statement of the letter’s purpose. For example, you might write, “Intent to Purchase {product or service},” or “Purchase of {product or service}.”
  • Buyer Name
  • Seller Name
  • Product or Service – Indicate the name of the product or service and the anticipated cost. If the product must meet specifications, include those here.
  • Purchase Price – Indicate the subtotal of each product or service and the order subtotal. Also, include the total with tax. For example, you might write, “250 transistors, subtotal $2500, and 250 modifiers, subtotal $2500. Order subtotal $5000.00, total with tax $5,050.00.”
  • Payment Method – Include the anticipated payment method and when the buyer is expected to pay the total.
  • Financing – If the buyer needs to obtain funding to pay for the order, indicate the financing information.
  • Binding Effect – Indicate whether the terms of the letter are binding or nonbinding. This statement is a critical piece of information that protects both parties from lawsuits due to a misunderstanding.
  • Currency – State the currency in which the buyer must pay for the products or services.
  • Governing Law – A statement that the terms of the letter are governed by the laws of {your state’s name.}
  • Acceptance – Leave a place for the buyer and the seller to sign indicating they agree to the terms of the letter. You might include a date by which both parties need to sign.
  • The Effective Date – This is the date you write your letter of intent.
  • A Subject Line – A statement of the letter’s purpose. For example, you might write, “Intent to Purchase {product or service},” or “Purchase of {product or service}.”
  • Buyer Name
  • Seller Name
  • Product or Service – Indicate the name of the product or service and the anticipated cost. If the product must meet specifications, include those here.
  • Purchase Price – Indicate the subtotal of each product or service and the order subtotal. Also, include the total with tax. For example, you might write, “250 transistors, subtotal $2500, and 250 modifiers, subtotal $2500. Order subtotal $5000.00, total with tax $5,050.00.”
  • Payment Method – Include the anticipated payment method and when the buyer is expected to pay the total.
  • Financing – If the buyer needs to obtain funding to pay for the order, indicate the financing information.
  • Binding Effect – Indicate whether the terms of the letter are binding or nonbinding. This statement is a critical piece of information that protects both parties from lawsuits due to a misunderstanding.
  • Currency – State the currency in which the buyer must pay for the products or services.
  • Governing Law – A statement that the terms of the letter are governed by the laws of {your state’s name.}
  • Acceptance – Leave a place for the buyer and the seller to sign indicating they agree to the terms of the letter. You might include a date by which both parties need to sign.

Tip: Use a consistent professional format for all your letters of intent. Consistency ensures you include all the necessary information. Print the letter on your company letterhead.

Letter of Intent to Purchase Products or Services (Format)

Effective Date: {date you write the letter}

RE: Intent to Purchase {Product} or {Service}

Buyer: {Buyer’s name, company name}

Seller: {Seller’s name, company name}

({Product} or {Service}): {concise description of the products or services to be purchased.}

Purchase Price: {Purchase price per unit for each product or service, subtotal for each product or service, subtotal for all, total price with tax for the entire order.}

Payment Method: {method with which the buyer will pay for the products or services, the date by which they will pay.}

Financing: {any financing that the terms depend on.}

Binding Effect: {Indicate whether the terms of the letter are binding or nonbinding.}

Currency: {Indicate the currency in which the buyer must pay.}

Governing Law: The terms of this letter are binding by the laws of the state of {your state}.

Acceptance: Please sign and return no later than {date} to accept the terms of this letter of intent.

{buyer’s signature and date}

{seller’s signature and date}

Sample Letter of Intent to Purchase Products or Services

Effective Date: August 12, 2040

RE: Intent to Purchase Carbon Fiber Material

Buyer: Melissa Jones, Best Aircraft Repair

Seller: Paul Davis, Greenleaf Materials

Product: Carbon Fiber Material, 2 Rolls, 100 yards per roll, DSM 1029

Purchase Price: $1000.00 per roll, subtotal $2,000.00, total with taxes and delivery $2,250.00

Payment Method: Company check, paid within 45 days of delivery

Financing: The terms of this letter are not dependant on financing.

Binding Effect: The terms of this letter are nonbinding and not enforceable by law. A formal agreement may be made at a later date in the form of a purchase order issued by Melissa Jones at Best Aircraft Repair.

Currency: The currency is the US Dollar ($)

Governing Law: The terms of this letter of intent shall be governed by the law of the state of New Jersey.

Acceptance: Please sign and return no later than September 2, 2040, to accept the terms of this letter of intent.

Melissa Jones, Best Aircraft Repair, August 12, 2040

Paul Davis, Greenleaf Materials, August 20, 2040

Letter of Intent to Purchase Products or Services (Word Template)

Letter of Intent to Purchase Products or Services (Word Template)

Conclusion

Letters of intent to purchase products or services are used to create a preliminary agreement between a seller and a buyer. They are not usually legally binding, but they are often followed up by purchase orders, which are legally binding. Be sure you include the purchase price and the terms of payment in your letter of intent. Remember that both parties must agree to the terms before the sale can be finalized with a purchase order.

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