A Practical Guide to Letters of Intent

A Letter of Intent, commonly called an LOI, is a preliminary document that outlines the principal terms of a proposed transaction before the parties negotiate and sign the complete definitive agreements.

LOIs are frequently used in:

• Purchases and sales of businesses;
• Asset purchases;
• Stock and membership-interest purchases;
• Mergers;
• Commercial leases;
• Joint ventures;
• Investments and financings;
• Licensing arrangements;
• Real-estate acquisitions;
• Franchise and dealership transactions; and
• Other complex commercial negotiations.

An LOI can be extremely useful. It can also create substantial legal and business risk if it is vague, internally inconsistent, or signed before the parties understand the proposed structure.

A carefully drafted LOI can:

• Confirm that the parties are discussing the same transaction;
• Identify major business terms;
• Establish a diligence process;
• Protect confidential information;
• Give a buyer an exclusive negotiating period;
• Identify approvals and closing conditions;
• Expose disagreements before the parties spend heavily on documentation; and
• Provide a roadmap for the definitive agreement.

A poorly drafted LOI can:

• Create unintended binding obligations;
• Leave one party locked into exclusivity without meaningful buyer obligations;
• Make a deposit nonrefundable too early;
• Fix a purchase-price formula that later proves unworkable;
• Omit essential conditions;
• Create an unclear duty to negotiate in good faith;
• Shift leverage before diligence is complete; or
• Produce litigation over whether the parties had already made a deal.

This Codex explains, in plain English:

• What an LOI is;
• What an LOI is not;
• Binding and nonbinding provisions;
• Exclusivity;
• Confidentiality;
• Due diligence;
• Deposits;
• Purchase-price adjustments;
• Conditions precedent;
• Why careful legal drafting matters;
• Common mistakes; and
• A sample timeline from LOI to closing.

This Codex focuses on New York and related federal contract principles in private business transactions. The appropriate terms depend on the transaction, industry, parties, tax structure, financing, and governing law.

What Is an LOI?

An LOI is a written statement of the principal terms on which parties are prepared to continue negotiating a proposed transaction.

It is often signed after initial discussions but before:

• Full due diligence;
• A definitive purchase agreement;
• Complete disclosure schedules;
• Financing commitments;
• Third-party consents;
• Regulatory approvals;
• Final tax structuring; and
• Closing documents.

An LOI is sometimes called a:

• Term sheet;
• Memorandum of understanding;
• Heads of terms;
• Indication of interest;
• Deal memorandum;
• Commitment letter; or
• Preliminary agreement.

The title is not decisive. Courts examine the actual language, completeness, context, and conduct of the parties.

The LOI’s practical function

The LOI asks: Do the parties agree enough on the major terms to justify investing in diligence and definitive documentation?

It can outline:

• Transaction structure;
• Assets or equity being acquired;
• Headline purchase price;
• Form and timing of payment;
• Working-capital or other price adjustments;
• Seller note or earnout;
• Assumed and excluded liabilities;
• Real estate and lease treatment;
• Employee transition;
• Restrictive covenants;
• Due-diligence access;
• Exclusivity;
• Confidentiality;
• Financing;
• Approvals;
• Closing conditions;
• Target closing date; and
• Which provisions are binding.

What an LOI Is Not

It is not necessarily the final contract

A typical acquisition LOI does not contain the detailed representations, covenants, indemnification procedures, tax provisions, closing deliveries, disclosure schedules, and remedies found in a definitive purchase agreement.

It is not a substitute for due diligence

The LOI reflects assumptions based on preliminary information. It does not verify:

• Revenue or earnings;
• Asset ownership;
• Liabilities;
• Contract transferability;
• Intellectual-property ownership;
• Tax compliance;
• Litigation;
• Employee compliance;
• Lease rights;
• Licenses; or
• Regulatory standing.

It is not automatically nonbinding

Calling a document a “Letter of Intent” does not guarantee that no part of it is enforceable.

New York courts consider objective manifestations of intent, including the words and conduct of the parties. In Stonehill Capital Management LLC v. Bank of the West, 28 N.Y.3d 439 (2016), the Court of Appeals held that an enforceable agreement had been formed even though a later signed agreement and deposit were contemplated. The court distinguished between conditions to contract formation and requirements for later performance.

It is not permission to negotiate carelessly

Even where the transaction terms are expressly nonbinding, confidentiality, exclusivity, expenses, governing law, access, return of information, or dispute provisions may be binding.

It is not a guarantee of closing

Diligence may reveal a serious problem. Financing may fail. A landlord or regulator may refuse consent. The parties may not agree on definitive terms. A valid closing condition may remain unsatisfied.

The LOI should state clearly when and why the parties may stop.

Binding and Nonbinding Provisions

The most important LOI drafting question is: Which provisions are intended to be legally enforceable now?

A well-drafted LOI should answer that question directly and consistently.

Common nonbinding provisions

In many acquisition LOIs, the following are stated to be nonbinding:

• Proposed transaction structure;
• Purchase price;
• Payment mechanics;
• Assets or equity to be purchased;
• Assumed liabilities;
• Working-capital targets;
• Earnout concepts;
• Employment arrangements;
• Restrictive-covenant concepts;
• Representations and warranties;
• Indemnification concepts;
• Proposed closing date; and
• The obligation to complete the transaction.

The LOI may state that these terms are only a basis for further negotiation and will not bind either party unless and until definitive agreements are executed and delivered.

Common binding provisions

The following may be binding even when the acquisition itself is not:

• Confidentiality;
• Exclusivity or no-shop obligations;
• Due-diligence access and conduct;
• Restrictions on contacting employees, customers, or suppliers;
• Public announcements;
• Return or destruction of information;
• Responsibility for expenses;
• Deposit or escrow terms;
• Governing law;
• Forum selection;
• Dispute resolution;
• Remedies for breach;
• No obligation to proceed; and
• Survival or termination of specified provisions.

Hybrid structure

Most LOIs are hybrids: some provisions bind immediately and others do not.

The document should include a section that:

1. Lists each binding section;
2. States that all other provisions are nonbinding;
3. States that neither party must close until definitive agreements are signed and delivered;
4. Addresses whether there is a duty to negotiate in good faith;
5. States when binding provisions terminate; and
6. Identifies remedies for breach.

Good-faith negotiation obligations

An LOI may expressly require the parties to negotiate definitive agreements in good faith. That duty is different from an obligation to close.

A duty to negotiate in good faith may prohibit a party from:

• Abandoning negotiations for a reason inconsistent with the LOI;
• Insisting on terms that contradict agreed terms;
• Pretending to negotiate while pursuing a prohibited transaction;
• Withholding agreed diligence access; or
• Using open issues as a pretext to avoid an obligation.

It ordinarily does not guarantee that the parties will agree on every remaining term.

The influential New York federal decision Teachers Insurance and Annuity Association v. Tribune Co., 670 F. Supp. 491 (S.D.N.Y. 1987) explained the difference between a fully binding preliminary agreement and a preliminary commitment to negotiate open terms in good faith.

The New York Court of Appeals later emphasized that the central questions are the parties’ intent, the need for later agreements, and whether execution of those agreements is a condition to performance. See IDT Corp. v. Tyco Group, S.A.R.L., 13 N.Y.3d 209 (2009).

Avoid an accidental duty to negotiate

If the parties do not want a legally enforceable good-faith negotiation duty, the LOI should say so. Phrases such as “the parties will work diligently,” “shall proceed in good faith,” or “intend to finalize promptly” may create arguments about enforceable obligations.

Conduct matters

A carefully drafted nonbinding clause can be weakened by conduct that suggests a final deal, such as:

• Announcing the transaction as complete;
• Accepting nonrefundable payment;
• Giving operational control to the buyer;
• Instructing employees that ownership has changed;
• Transferring assets;
• Performing major obligations; or
• Describing the LOI as a binding agreement in communications.

Parties should align their conduct with the document.

Exclusivity

An exclusivity or no-shop provision prevents the seller from pursuing competing transactions during a specified period.

Why buyers request exclusivity

A buyer may spend substantial time and money on:

• Legal diligence;
• Accounting review;
• Quality-of-earnings analysis;
• Financing;
• Environmental review;
• Appraisals;
• Regulatory applications;
• Contract drafting; and
• Management attention.

The buyer may not want to incur those costs while the seller uses the buyer’s work to solicit a higher offer.

Why sellers resist broad exclusivity

Exclusivity removes the seller from the market and can reduce leverage. A seller may be tied up while a buyer:

• Delays diligence;
• Has uncertain financing;
• Seeks to renegotiate price;
• Diverts resources elsewhere;
• Fails to provide drafts; or
• Walks away at the end of the period.

Key exclusivity terms

The LOI should address:

• Start and end date;
• Automatic extensions, if any;
• Transactions covered;
• Persons bound;
• Existing discussions;
• Solicitation of new offers;
• Response to unsolicited inquiries;
• Duty to notify buyer of approaches;
• Information that may be disclosed;
• Board or fiduciary considerations;
• Buyer milestones;
• Early termination;
• Remedies; and
• Survival.

Define the prohibited transaction

A broad provision may cover:

• Sale of assets;
• Sale of stock or membership interests;
• Merger;
• Recapitalization;
• Joint venture;
• License of material assets;
• Sale of a division;
• New equity financing;
• Extraordinary debt transaction; or
• Another transaction that frustrates the proposed acquisition.

The definition should fit the deal rather than indiscriminately restricting ordinary business.

Buyer milestones

A seller may condition exclusivity on the buyer meeting milestones, such as:

• Delivering a diligence request list;
• Providing evidence of funds;
• Completing specified diligence;
• Delivering the first purchase-agreement draft;
• Submitting financing materials; or
• Filing a regulatory application.

Milestones can prevent the buyer from obtaining a free option without moving forward.

Remedies for breach

Possible remedies include:

• Injunctive relief;
• Expense reimbursement;
• A break fee;
• Liquidated damages, if enforceable;
• Extension of exclusivity; or
• Other damages.

Remedy language should be carefully evaluated. A penalty is not automatically enforceable merely because the parties call it liquidated damages.

A recent federal case applying New York principles, Cambridge Capital LLC v. Ruby Has LLC, 675 F. Supp. 3d 363 (S.D.N.Y. 2023), illustrates how exclusivity and good-faith obligations in an acquisition LOI can become the focus of litigation after the transaction fails.

Confidentiality

Confidentiality may be addressed in:

• A separate nondisclosure agreement signed before the LOI;
• A confidentiality section in the LOI; or
• Both.

Information that may require protection

• Financial statements;
• Tax returns;
• Customer and supplier identities;
• Pricing and margins;
• Employee information;
• Trade secrets;
• Software and technical information;
• Contracts;
• Litigation;
• Business plans;
• The existence of negotiations; and
• Proposed deal terms.

Key confidentiality issues

The agreement should address:

• Definition of confidential information;
• Permitted use;
• Permitted recipients;
• Responsibility for representatives;
• Legally compelled disclosure;
• Security obligations;
• Return or destruction;
• Duration;
• Remedies;
• Privileged information;
• Residual knowledge;
• Employee, customer, and supplier contact; and
• Public announcements.

Permitted representatives

A buyer may need to share information with:

• CorwinLaw;
• Accountants and tax advisers;
• Lenders;
• Equity sources;
• Insurers;
• Consultants;
• Environmental advisers; and
• Regulatory specialists.

The agreement should permit necessary disclosure while protecting the seller.

Data-room access

The seller may use staged access:

1. Preliminary financial and organizational information;
2. Detailed contracts and employee data after the LOI;
3. Highly sensitive customer, pricing, or technical information later;
4. Unredacted information only when necessary; and
5. Privileged or regulated information through special procedures.

Confidentiality and exclusivity are different

Confidentiality limits use and disclosure of information. Exclusivity limits pursuit of competing transactions. One does not automatically create the other.

Due Diligence

The LOI should establish a workable diligence process without pretending that the buyer already knows the result.

Scope

Diligence may include:

• Corporate organization and ownership;
• Financial statements and tax returns;
• Quality of earnings;
• Assets and liens;
• Contracts;
• Real estate and leases;
• Employees and benefits;
• Intellectual property;
• Litigation;
• Taxes;
• Insurance;
• Licenses and regulatory compliance;
• Environmental matters;
• Privacy and cybersecurity; and
• Customers and suppliers.

Access language

The LOI may address:

• Data-room timing;
• Responsiveness;
• Management interviews;
• Site visits;
• Financial-system access;
• Customer or supplier contact;
• Employee contact;
• Confidentiality safeguards;
• Privilege;
• Destructive testing;
• Cost allocation; and
• Restoration after inspection.

Seller protections

The seller may require:

• Advance scheduling;
• No unreasonable disruption;
• No direct contact without consent;
• No disclosure to competitors;
• Compliance with privacy law;
• Clean-team arrangements;
• No interference with employees; and
• Buyer responsibility for site damage.

Diligence condition

A buyer may want the transaction conditioned on diligence satisfactory to the buyer in its discretion. A seller may resist a broad condition that gives the buyer an unrestricted option.

Possible compromises include:

• A defined diligence period;
• Specific categories of material diligence;
• Objective materiality standards;
• A right to terminate before definitive signing;
• Deposit refund if specified issues arise; or
• Buyer milestones during exclusivity.

Diligence should affect the final agreement

Identified issues may result in:

• Price reduction;
• Structure change;
• Excluded liabilities;
• Specific indemnity;
• Escrow or holdback;
• Closing condition;
• Remediation covenant;
• Representation and warranty;
• Insurance; or
• Decision not to proceed.

Deposit Language

A deposit can demonstrate seriousness, fund an escrow, secure exclusivity, or provide partial payment. It can also become a major dispute.

Questions the LOI should answer

• Is a deposit required?
• How much?
• When is it due?
• Who holds it?
• Is it credited against the purchase price?
• Is it refundable?
• When does it become nonrefundable?
• What happens if diligence is unsatisfactory?
• What happens if financing fails?
• What happens if seller breaches?
• What happens if buyer breaches?
• Does interest accrue?
• Who pays escrow fees?
• What instructions release it?
• What happens if the parties dispute release?

Refundable deposit

A deposit may be refundable until:

• Completion of diligence;
• Signing of the definitive agreement;
• Satisfaction of specified conditions;
• Expiration of a termination right; or
• A stated date.

Nonrefundable deposit

A deposit may become nonrefundable if the buyer walks away without an agreed reason after a specified stage.

The parties should avoid vague phrases such as “subject to due diligence” without explaining what happens to the deposit.

Escrow

A neutral escrow agent can reduce risk. The escrow agreement should specify release mechanics and dispute procedures.

Deposit is not always a formation condition

As Stonehill illustrates, a contemplated deposit may be treated as a requirement for performance rather than a prerequisite to contract formation unless the language unmistakably provides otherwise. If no binding transaction is intended before payment and definitive signing, the LOI should state that clearly.

Purchase Price

A headline price rarely tells the complete economic story.

The LOI should identify whether the price assumes:

• Cash-free, debt-free delivery;
• A target level of working capital;
• Retention of cash;
• Payment of debt;
• Inclusion of accounts receivable;
• Inclusion of inventory;
• Assumption of customer deposits;
• Transaction expenses paid by seller;
• Real estate included or excluded;
• Seller financing;
• Earnout; or
• Rollover equity.

Form of consideration

Consideration may include:

• Cash at closing;
• Seller note;
• Escrow or holdback;
• Earnout;
• Buyer equity;
• Assumption of debt;
• Consulting payments; or
• Noncompetition payments.

Each component may have different tax, credit, and enforcement consequences.

Purchase Price Adjustments

Purchase-price adjustments attempt to ensure that the buyer receives the agreed economic business at closing.

Working capital

A working-capital adjustment compares closing working capital with an agreed target.

The LOI should consider:

• Accounts included;
• Accounts excluded;
• Accounting principles;
• Historical practices;
• Target amount;
• Seasonality;
• Estimated closing statement;
• Post-closing true-up;
• Review period;
• Dispute procedure; and
• Independent accountant.

A phrase such as “normal working capital” is often inadequate.

Cash and debt

The LOI should define or at least identify the intended treatment of:

• Cash;
• Borrowed money;
• Accrued interest;
• Capital leases;
• Factored receivables;
• Related-party balances;
• Unpaid transaction bonuses;
• Past-due payables;
• Tax liabilities;
• Customer deposits;
• Deferred revenue; and
• Other debt-like items.

Transaction expenses

Clarify whether seller transaction expenses reduce proceeds and which expenses are included, such as:

• Legal fees;
• Accounting fees;
• Broker fees;
• Change-in-control bonuses;
• Equity cancellation payments;
• Lender fees; and
• Sale-related payroll taxes.

Inventory

If inventory materially affects value, the LOI may address:

• Included inventory;
• Valuation method;
• Obsolete or slow-moving items;
• Physical count;
• Consignment;
• Returns;
• Shrinkage; and
• Post-closing adjustment.

Earnouts

The LOI should identify the basic earnout structure, including:

• Metric;
• Measurement period;
• Threshold and cap;
• Payment timing;
• Buyer operational control;
• Accounting rules;
• Seller information rights;
• Employment dependency;
• Acceleration; and
• Dispute resolution.

“Ten percent of profits for three years” is not a complete earnout formula.

Avoid false precision

An LOI need not contain the final adjustment mechanism, but it should identify the economic assumptions. If the parties disagree on whether accounts receivable, customer deposits, or transaction bonuses affect price, deferring the issue may only make the dispute more expensive.

Conditions Precedent

A condition precedent is an event or act that must occur before a party is required to perform an obligation.

Common closing conditions

• Satisfactory completion of diligence;
• Negotiation and execution of definitive agreements;
• Accuracy of representations and warranties;
• Performance of pre-closing covenants;
• Board, shareholder, member, or manager approval;
• Financing;
• Landlord consent;
• Contract assignments or change-of-control consents;
• Regulatory approval;
• Required licenses;
• Lien releases and debt payoff;
• Employment or consulting agreements;
• Restrictive-covenant agreements;
• No legal prohibition;
• No specified material adverse event;
• Delivery of minimum working capital;
• Tax clearance; and
• Required closing documents.

Formation versus performance

Drafting must distinguish:

• A condition that must occur before any binding agreement exists; and
• A condition that must occur before performance is due under an existing agreement.

The distinction can determine whether a party is free to walk away or has breached an existing obligation.

“Subject to” may be insufficient

New York’s Stonehill decision cautions that formulaic “subject to” language does not always unmistakably reserve the right not to be bound. If the parties intend no acquisition contract before definitive signing, say:

• No binding obligation to complete the transaction exists;
• Definitive agreements must be executed and delivered by all required parties;
• No oral acceptance or conduct creates a closing obligation;
• Either party may terminate negotiations, subject to binding sections; and
• The deposit, if any, does not create a purchase obligation before definitive signing.

Financing condition

A buyer without committed financing should disclose that reality. A seller may require:

• Proof of funds;
• Financing commitment deadline;
• Lender diligence access;
• Buyer equity commitment;
• Reverse termination fee; or
• Limits on a financing condition.

Approval conditions

“Subject to board approval” should identify:

• Whose board;
• Whether approval is required before signing or closing;
• Whether the party must seek approval;
• Deadline;
• Consequences of failure; and
• Whether approval may be withheld freely.

Why Attorneys Insist on Careful Drafting

The title does not control

A court examines language, completeness, context, and conduct—not merely the heading “Letter of Intent.”

Business shorthand is legally ambiguous

Terms such as these may conceal major disagreements:

• “Debt-free”;
• “Normal working capital”;
• “Standard indemnification”;
• “Usual representations”;
• “Satisfactory diligence”;
• “Market terms”;
• “Subject to contract”;
• “Nonrefundable deposit”;
• “Best efforts”; and
• “Close promptly.”

An LOI changes leverage

After signing:

• Seller may be exclusive;
• Buyer may access sensitive information;
• Employees may learn of the transaction;
• Financing may begin;
• Professional costs increase;
• The seller may stop marketing; and
• Each party may become psychologically committed.

Unresolved terms become harder to negotiate later.

Tax structure must be considered early

Asset versus equity structure can affect:

• Taxes;
• Liabilities;
• Contract assignments;
• Employees;
• Licenses;
• Purchase-price allocation;
• Basis step-up;
• Real estate; and
• Closing mechanics.

A price accepted under one structure may be unacceptable under another.

Drafting allocates failure risk

The LOI should answer who bears the cost if:

• Diligence fails;
• Financing fails;
• Consent is denied;
• A regulator delays;
• Seller accepts another offer;
• Buyer retrades;
• The parties cannot agree on indemnification;
• A deposit is disputed; or
• Market conditions change.

Lawyers look for consistency

A document should not say the transaction is nonbinding while elsewhere stating that the parties “agree to sell,” “shall close,” or “must consummate.”

Careful drafting prevents one sentence from undermining another.

Common LOI Mistakes

1. Signing before legal and tax review

A “short” LOI can determine structure, price, exclusivity, and deposits. Review after signing may be too late.

2. Saying the entire LOI is nonbinding

This can unintentionally undermine confidentiality, exclusivity, and expense provisions intended to bind.

3. Saying the entire LOI is binding

This can create an unintended obligation to close on incomplete terms.

4. Failing to list binding sections

Do not make the reader infer which provisions survive.

5. Using inconsistent language

Avoid combining “nonbinding proposal” with unconditional words such as “shall purchase” or “seller agrees to sell.”

6. Ignoring transaction structure

“Purchase of the business” does not identify whether assets, stock, or LLC interests are being acquired.

7. Quoting a price without assumptions

A price must be evaluated with cash, debt, working capital, inventory, taxes, and expenses.

8. Vague exclusivity

The LOI should define duration, prohibited conduct, covered parties, unsolicited offers, milestones, and remedies.

9. Overlong exclusivity without buyer milestones

A buyer may gain a free option while the seller loses market access.

10. Inadequate confidentiality

An LOI may reveal the potential sale itself, not just business records.

11. Unclear deposit terms

“Nonrefundable” is incomplete without specifying when, why, and to whom the deposit may be released.

12. Broad diligence discretion without limits

A seller may unknowingly give the buyer a no-cost option to terminate for any reason.

13. Narrow diligence rights

A buyer may discover that it cannot contact a landlord, key customer, lender, regulator, or employee when necessary.

14. Leaving working capital for later

Working-capital mechanics can change price materially.

15. Treating conditions as boilerplate

A required consent, license, financing, or lease may be the entire deal.

16. Promising a closing date that is impossible

Regulatory, lender, landlord, and diligence timelines should be considered.

17. Undefined good-faith duty

If the duty exists, specify its scope. If it does not, say so.

18. Failing to address expenses

Each party commonly bears its own expenses, but lender, escrow, filing, consent, and diligence costs may require allocation.

19. Ignoring public announcements and employee contact

Premature disclosure can disrupt the business.

20. Letting conduct contradict the LOI

Communications and actions should remain consistent with the agreed binding status.

Practical LOI Checklist

Transaction

• Correct parties and entity names;
• Asset, stock, or membership-interest structure;
• Purchased business or assets;
• Excluded assets;
• Assumed and excluded liabilities;
• Real estate and leases;
• Required approvals.

Economics

• Headline price;
• Cash, debt, and working-capital assumptions;
• Inventory and accounts receivable;
• Cash at closing;
• Deposit;
• Escrow or holdback;
• Seller note;
• Earnout;
• Rollover equity;
• Transaction expenses;
• Tax structure.

Process

• Diligence scope and access;
• Data-room timing;
• Contact restrictions;
• Exclusivity period;
• Buyer milestones;
• Financing process;
• Drafting responsibility;
• Target signing and closing dates;
• Required consents and filings.

Legal effect

• Binding provisions expressly listed;
• Nonbinding transaction terms clearly identified;
• No closing obligation before definitive signing;
• Good-faith negotiation duty included, limited, or disclaimed;
• Confidentiality;
• Exclusivity;
• Deposit and escrow;
• Expenses;
• Governing law;
• Forum and remedies;
• Termination and survival.

Sample Timeline From LOI to Closing

The following is an illustrative timeline for a private business acquisition. Actual timing may be shorter or significantly longer.

Timeline cautions

• Exclusivity should be long enough for the anticipated process, but not indefinite.
• Regulatory and landlord approvals may control the closing date.
• The definitive agreement may be signed before all conditions are satisfied.
• Purchase-price adjustments and earnouts continue after closing.
• A closing target is not a guarantee unless the definitive agreement makes it one.

Questions to Discuss With CorwinLaw

1. Is an LOI appropriate for this transaction?
2. Which provisions should be binding?
3. Should there be a duty to negotiate in good faith?
4. How should the proposed transaction be structured?
5. What assumptions underlie the purchase price?
6. Is a working-capital adjustment needed?
7. Should there be a deposit, and when is it refundable?
8. How long should exclusivity last?
9. What milestones should the buyer meet?
10. What information may be disclosed, and to whom?
11. What diligence and third-party contact rights are needed?
12. Which approvals and conditions are essential?
13. Is financing a condition?
14. What happens if the parties cannot agree on definitive terms?
15. What remedies apply to breach of a binding LOI provision?

For assistance preparing, reviewing, or negotiating a Letter of Intent, contact CorwinLaw at www.corwinlaw.net.

Important Legal Notice

This Codex is provided by CorwinLaw, www.corwinlaw.net, for general educational and informational purposes only. It is not legal, tax, accounting, valuation, investment, or financial advice. It does not address every transaction, industry, jurisdiction, or factual circumstance.

The legal effect of an LOI depends on its exact language, the parties’ intent, their conduct, the governing law, and the surrounding transaction. Calling a document “nonbinding” or “subject to contract” does not necessarily resolve every enforceability issue.

Reading this Codex, visiting a website, or contacting CorwinLaw does not create an attorney-client relationship. An attorney-client relationship should arise only through a written engagement agreement accepted by CorwinLaw and the client. Do not send confidential or time-sensitive information unless and until CorwinLaw confirms that it represents you.

Parties should obtain legal and tax review before signing an LOI. CorwinLaw can assist with transaction structure, LOI drafting, confidentiality, exclusivity, diligence, deposits, price adjustments, conditions, definitive agreements, and closing.

Last reviewed: August 2026.

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