Which document communicates an agreement to enter negotiations?

A letter of intent is a pivotal document in the negotiation process as it indicates the intention of one party to enter into negotiations with another party. It typically outlines the preliminary understanding between the parties who intend to move toward a more formal agreement.

The essence of a letter of intent lies in its ability to clarify the main points of agreement and establish a common ground before entering into detailed discussions or drafting a formal contract. This document can serve as a useful tool to balance the interests of both parties, set forth key terms and conditions, and signal commitment without forming a legally binding contract.

While a formal contract is definitive and legally binding, it comes after negotiations rather than serving as an initial step. A project outline provides an overview of a project’s scope but does not specifically address the intention to negotiate. A bidding proposal is an offer for specific terms related to a project but does not inherently communicate a willingness to negotiate; instead, it presents an offer that may or may not be discussed further. Thus, the letter of intent stands out as the appropriate document for communicating an agreement to initiate negotiations.