Marked non-binding, and routinely enforced in part. The exclusivity and confidentiality clauses usually do bind.
Esshaki Legal Media TeamCurrent as of September 2024
A letter of intent records the commercial shape of a deal before the definitive
agreement. Most say they are non-binding, and most are binding in part.
The provisions that typically do bind, and are meant to: exclusivity (a
no-shop for a stated period), confidentiality, expense allocation, and
governing law. The economic terms — price, structure, conditions — are the
part intended not to bind.
Two risks recur. First, an LOI that omits a clear statement of which clauses
survive invites an argument that the whole thing is enforceable, particularly
where the terms are detailed and the parties began performing. Second, some
jurisdictions imply an obligation to negotiate in good faith from an executed
LOI, which can expose a party who walks away for no reason to reliance damages
even where the deal terms never bound anyone.
Draft it as though the exclusivity clause is the only one that matters, because
in a deal that collapses it usually is.