Letter of intent, explanations

In theory, the formation of a contract arises from the simple meeting of an offer and an acceptance.
In practice, successive writings may be made before the contract is concluded, during negotiations, the scope of which then depends on the will of its author.

Anglo-Saxon in origin, the letter of intent is one such document, capable of formalizing both a simple unilateral moral commitment (“ gentleman’s agreement” or “Memorandum of Understanding “) and a genuine legal commitment of a contractual nature.
In this article, we will focus solely on the letter of intent as a moral commitment.

Letter of intent: definition and benefits

A letter of intent is a non-binding document between two legal entities, setting out the framework for negotiations and the main terms and conditions of the proposed contract.
The purpose of such a document is to confirm the progress of talks between the parties.

The letter of intent: a non-binding document

Intended to demonstrate a willingness to enter into the planned contract, it does not, however, oblige its author to enter into the latter, as freedom governs the relationship between the parties during this pre-contractual phase.
However, it would be perilous to assert that the letter of intent is devoid of any value.
Potentially binding clauses in letters of intent include confidentiality and exclusivity clauses, which prevent co-contractors from negotiating with another party.
Depending on the context, the content and the rules of usage, the judge is also likely to requalify it as a negotiation contract6, or even consider that the planned contract has been concluded.
At the very least, the letter of intent constitutes proof of the serious nature of the talks, which the victim of an abusive breach of negotiations can invoke in support of his claim for damages.

The drafting of the letter of intent is an important stage in the contractual relationship, which should not be underestimated to avoid or reduce the risk of future litigation.

Kaufhold & Réveillaud is at your side to defend your interests.

For further information or to contact us, please send your request to contact@kr-legal.lu. We’ll get back to you as soon as possible.

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