The Letter of Intent Is Already a Negotiation

There is a widespread belief in procurement that the letter of intent is a staging post, a way of signalling direction while the real work of contract negotiation continues. The suppliers who ask for LOIs understand something that the buyers who sign them often do not, which is that the letter of intent frequently is the negotiation, and everything that follows is consolidation of what was already agreed.

The mechanism is simple. An LOI, even when framed as non-binding, establishes a commercial frame: the price, the volume, the scope, the key delivery milestones. Once these are in writing and both parties are operating as if the deal is going ahead, the practical barriers to changing any of them rise sharply. Reopening the price in the full contract negotiation, after the LOI has been signed and the supplier has started mobilising, is not impossible, but it requires justification that simply declining to sign did not. The supplier has a document to point to. You are the one asking to deviate from it.

Why suppliers want the LOI early

A request for a letter of intent before the contract terms are fully agreed is almost always a commercial move, not an administrative one. The supplier who asks for an LOI at the end of a productive commercial discussion is trying to convert the momentum of a good meeting into a commitment before the detailed terms have been examined. They want the relationship established before the procurement specialist has read the small print.

This does not make it bad faith. It makes it good selling. But understanding the purpose of the ask changes how to respond to it. An LOI that locks in the headline commercial terms before the full contract is reviewed is a negotiating loss that looks like a procedural step. The buyer who signs it on the grounds that it is non-binding has not understood that the binding nature of the full contract depends heavily on whether the LOI created expectations both parties have already started acting on.

What to agree before, and what to leave open

Not all LOIs are traps. In genuinely complex procurements, an LOI that covers scope, timeline, and governance arrangements — while explicitly leaving price and commercial terms open for the formal contract — is a reasonable way to allow mobilisation work to begin. The difference is in what is specified and what is deliberately reserved.

The questions worth asking before signing any LOI are which terms, once in this document, will be hardest to reopen, and whether you are comfortable with those terms as they stand right now. If the price needs further work, the right moment to say so is before the LOI, not after. A supplier who hears that you need to reconsider commercial terms after an LOI has been signed will listen, but they will listen from a much stronger position than the one they occupied before the signature.

When you need the contract to sign anything

The most direct way to avoid the trap is to require that the full contract be available before any commitment document is signed. This is not unreasonable, and a supplier who resists it is usually trying to protect the commercial position the LOI was designed to secure. The practical counter to "we need an LOI to start the work" is "we need the contract in order to agree the LOI." That sequencing keeps the full negotiation open and removes the instrument the LOI was designed to use.

The moment a meeting goes well and the supplier asks for something in writing, the pressure to say yes feels low-risk and reasonable. It is not. Recognising the LOI request as a commercial move — and knowing exactly which terms to reserve before putting anything on paper — is a skill that works far better when it has been rehearsed. Voice2Evolve creates the specific conditions: a productive meeting, a supplier who wants to capture the momentum, and a buyer who has to decide what to commit to before the full negotiation is done.

Procurement takeaway

• Identify every commercial term in a proposed LOI that would be difficult to reopen after signature, and resolve each of those terms before you sign — not after.
• Counter "we need an LOI to start the work" with "we need the contract in order to agree the LOI" — that sequencing keeps the full negotiation open.
• If an LOI is unavoidable, explicitly exclude price and payment terms from its scope in writing, reserving those for the formal contract.
• Treat the post-LOI commercial conversation as effectively closed — any improvements you needed should have been secured before the letter was signed.