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Can Businesses Use a Letter of Intent as a Binding Agreement to Work Together?

Can Businesses Use a Letter of Intent as a Binding Agreement to Work Together?

Author: Dan BrecherDate: August 31, 2021

When businesses agree to work together, there are often a lot of details to work out. A letter of intent or memorandum of understanding can be used to formalize an agreement to move forward toward a mutual goal. Whether it amounts to a legally-binding contract depends on the intent of the parties, so it’s essential to make sure everyone is on the same page.

In many cases, a letter of intent or memorandum of understanding (MOU) is not a contract. Instead, it signals that a more formal (and legally binding) agreement is contemplated at the conclusion of the negotiations. In addition to confirming a willingness to work together, a letter of intent may also outline the purpose and the scope of negotiations and outline what has been agreed to so far.

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