This article posted on our partner site illustrates how a letter of intent (LOI) can be interpreted as either binding, or non-binding on both parties. To avoid drafting a legally binding LOI the parties should consider three central points. First, the LOI should explicitly state that LOI is not indented to be legally binding and should avoid the use of contractual language (e.g. “this agreement”, “upon acceptance”, or “it is agreed”). Second, the LOI should clearly state that it is not the entire agreement and that a final, definitive agreement with all the relevant terms will be drafted at a later point. Third, until a final agreement has been reached the parties should ensure that their conduct before, during, and after the LOI does not imply an intention to be bound.


–  –  –

This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find where you see this logo.