this is written for the perspective and benefit of a business seller. in some cases, business owners are even advised that they should request a loi in order to learn price and terms from the prospective buyer. if you sign a loi early in the process, you are likely to sell for a lower price and weaker terms than you deserve.

a party that has signed a letter of intent (loi) may be legally bound to honor it depending on how the letter is drafted. in a business-to-business transaction, a letter of intent normally contains a provision stating that the letter is non-binding. on the other hand, the parties to a letter of intent should not rely on assumptions: strong non-binding language is recommended. if the letter is treated as a contract, it could be ruled binding. if two parties draft and sign an ambiguous letter of intent but have a history of non-binding agreements together, it is likely the court will rule the most recent letter as also being non-binding.