7 Letters of Intent

Subject(s):

Construction of contract — Formation of contract — Interpretation of contract — Performance of contract — Validity of contract

Many contracts are the product of months or years of negotiations, often involving consideration of many side issues and involving teams of experts and advisers. In many cases the parties make written statements of provisional agreement during the negotiation. The names given to such provisional statements include Letters of Intent, Heads of Agreement, Memorandum of Understanding, Agreement in Principle, and so on. This chapter focuses on letters of intent. It discusses cases where the letters of intent do not create a contract; cases where letters of intent do create a contract; cases where the letters of intent have some legal effect; letters of intent followed by performance; letters of comfort; and agreements imposing obligations as to the course of the negotiations.