Between the first quote and the signed supply contract, weeks go by in samples, adjustments and document checks. During that time the understanding often lives in conversations or scattered messages. A letter of intent is a short document that gathers that shared understanding without turning negotiation into a full commitment.
This guide is for brand owners and distributors negotiating with an argan oil manufacturer. It is practical, not legal advice: have a lawyer who knows your country's law and the manufacturer's review the final wording.
What is a letter of intent and when do you need one?
It is a document signed by both sides describing the expected deal, its main terms and the steps leading to a contract. It is not a quote, a purchase order or a full contract.
- You need time to prepare samples, lab tests and labels.
- You want to reserve production capacity or a season.
- You need to show a partner or lender that the arrangement is serious.
For a small, straightforward order, an approved quote and a detailed purchase order are usually enough.
What binds and what does not
| Term | Usual nature | Note |
|---|---|---|
| Final quantity and price | Usually non-binding | Fixed in the contract or purchase order |
| Confidentiality | Binding | Applies even without a contract |
| Limited negotiation exclusivity | Binding if written | Clear duration and scope |
| Cost of samples and tests | To be agreed | Who pays, and any later credit |
| Governing law and disputes | Binding | Avoids arguments over jurisdiction |
| Obligation to sign the final contract | Usually non-binding | Each side stays free to walk away |
Terms worth including
- Product and purpose: cosmetic or culinary oil, reference specifications, intended use (private label, wholesale resale, formulation).
- Indicative quantity and timing: a non-binding range that helps the factory plan capacity, since supply follows the harvest season.
- Verification steps: samples, technical data sheet, lab tests, remote audit or visit, each with an owner and target date. See our working process for the usual sequence.
- Confidentiality: if you share a formula or design, read our guide on formula ownership and NDAs.
- Temporary exclusivity: a precise duration and what happens when it ends. The manufacturer will likely ask for proof of seriousness in return.
- Costs: free or paid samples, whether they are credited against the first order, shipping fees.
- Governing law and language: state which version prevails if there is a translation.
Steps to write it
- Summarize in writing what has really been agreed and have the other side confirm it.
- Separate firm from indicative terms, marking each as binding or non-binding.
- Set an expiry date, renewable in writing.
- State that the final contract replaces the letter.
- Have a lawyer review it.
- Check that the signatory can commit their company.
Common mistakes
- Writing a final price with no conditions: it may be read as a firm offer.
- Mixing letter and contract: you lose flexibility without gaining protection.
- Leaving quality out: see the clauses in a quality agreement with the manufacturer.
- Treating silence as agreement.
FAQ
Does the letter oblige me to buy?
In principle not for the purchase itself, provided it says so. Confidentiality and exclusivity terms may still bind you. Ask a lawyer.
How is it different from a quote?
A quote sets commercial terms and may become binding once accepted. A letter describes the negotiation path.
Do I need one for a small order?
Rarely. It helps when samples, customization and lab tests are involved.
What about an annual contract?
It fixes volumes, quality and pricing for a longer period. See the guide to the annual argan oil supply agreement.
Next step
A clear agreement at the start saves weeks of revisions later. To launch argan oil under your own brand, define your specifications, then request a quote from Assil Ouargane.
