This lesson looks at formal preliminary agreements, often titled letters of intent or memorandums of understanding. Often parties sign a formal preliminary agreement at the beginning of negotiations without the intention of being bound to the transaction as a whole prior to the completion of a formal agreement. However, the formal preliminary agreement may bind the parties to negotiate in good faith and to other obligations related to the transaction. This lesson can be worked as an introduction to letters of intent or as a review. However, prior to working this lesson, you should have an understanding of offer, acceptance and mutual assent.