Letters of Intent Binding or Not

Be careful, your Letters of Intent may be binding unless drafted properly. That’s the message from a 2011 case First National Mortgage Co. v. Federal Realty Investment Trust, 631 F.3d 1058 (February 1, 2011).

Companies often use Letters of Intent to document their intention to enter into an agreement and do business together. But Letters of Intent are generally intended to be expressions of intent only and usually include a provision that they are not binding agreements. In fact, even if such a provision is not included in the Letter of Intent it is often the general understanding of the parties that the Letter of Intent is not legally binding but merely an “agreement to agree”.

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