"We have a deal" is a sentence that can mean radically different things depending on which document, if any, actually got signed. Two of the most commonly confused: the Letter of Intent and the Sales & Purchase Agreement.
Letter of Intent (LOI)
An LOI signals serious interest and lays out the broad shape of a potential deal — the commodity, an approximate quantity, a target price range. It is, generally, not legally binding on price or delivery. Think of it less as a contract and more as a formal signal that both sides are ready to move from casual conversation into structured negotiation.
Sales & Purchase Agreement (SPA)
This is the actual binding contract. Specific quantity, specific price, incoterms, payment terms, and — critically — penalties for non-performance. This is the document where real, enforceable obligations begin. Before an SPA is signed, in almost every meaningful sense, nobody's actually committed to anything yet.
The gap where deals go wrong
The most common and most expensive mistake is treating an LOI as though it were an SPA. Sellers who "reserve" product against an LOI that never converts into a real agreement. Buyers who assume the indicative price in the LOI is locked, only to find out — correctly, per the LOI's own terms — that it wasn't.
The LOI isn't the finish line. It's the starting gun for the part of the process that actually determines whether the deal is real.
What's supposed to happen between the two
The space between LOI and SPA exists for a reason: due diligence, proof of funds verification, product inspection or sampling where relevant, and agreement on the commission structure everyone's expecting to be paid from. The LOI buys time to do this work properly. It doesn't replace the need to do it.
The red flag hiding in plain sight
If someone is pushing to skip straight from an informal conversation to a payment request, with no LOI and no SPA anywhere in the sequence, they're not being efficient. They're skipping the part of the process where anyone has actually agreed to anything enforceable — which tends to be the point.
Why the stages should be visible, not implied
The reason "we have a deal" gets misunderstood so often is that the actual stage of a deal usually lives in someone's memory, or scattered across an email thread nobody's re-read in weeks. CommodityOS moves deals through explicit, tracked stages — LOI submitted, proof of funds verified, SPA signed — as distinct steps rather than a vague, evolving feeling of "things are going well." "We have a deal" always maps to an actual, visible stage, not just an impression.
An LOI is a handshake with better grammar. An SPA is the handshake's lawyer.
Looking for other terms? See the full Commodity Trading Glossary.