Ryan sends Michael a letter of intent for the purchase of a tract of land. The letter of intent outlines the purchase price, the legal description, and the financing terms. A paragraph is included that states that the letter of intent is a non-binding agreement, and is an offer to enter into negotiations. a. The letter of intent is an expression of opinion and does not indicate an intention to enter into a binding agreement.

b. The letter of intent is an invitation to negotiate, which is not an offer.

c. The letter of intent is a statement of a future intent, which is not an offer.

d. The letter of intent is an offer that may be accepted by Michael.

The correct answer is b. The letter of intent is an invitation to negotiate, which is not an offer.

Explanation:

The letter of intent is a document that is written as a pre-agreement between two people or two entities that have the commitment and the intention to proceed further and formalize a contract. They resemble a contract, but unlike these, it is not binding.

We may think that the fact that the letter of intent is not binding makes it lose its value or its usefulness as a practical tool. But the reality is that it serves as proof of will, and such proof may be sufficient proof for other clients or other participants to decide to withdraw.

In addition, the letter of intent itself implies the existence of a negotiation, where those easier questions usually appear, by mutual agreement. Leaving for the real contract, those more complex issues that require more negotiation.