Blog Bite: Can a non-binding letter of intent ever trump the existence of a definitive agreement?

November 10, 2017

This article posted on our partner site examines the surprising decision in IHAG-Holding, A.G. v. Intrawest Corporation, where the terms of a letter of intent were enforced instead of the terms contained in the definitive agreement. The decision revealed that, in some cases, a “complete agreement” clause can be set aside (i.e. if in the interest of finding the common intention of the parties and/or if a party is found to not be acting in good faith). In this particular case, there was a drafting error overlooked by all parties which would have resulted in an unreasonable commercial transaction, if not remedied. Overall, it highlights the importance of careful drafting and that the goal is not to negotiate the letter of intent as one would a definitive agreement but rather to recognize that non-binding does not equate to without consequence.

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Written by Alina.