By: WBG, LLP Published: January 2009

Letter of Intent, without an Express Reservation Not to Be Bound, is Binding.

The Appellate Division, Second Department recently affirmed a lower court decision that held that a Letter of Intent (“LOI”) together with expressly incorporated documents constituted a valid and enforceable construction contract. Although the decision is sparse as to factual details, the court reiterated the rule that an LOI that manifests the parties’ intent to be bound by its terms, and that contains the price, scope of work and time for performance - but does not contain an express reservation by either party of their right not be bound until a more formal agreement is signed – is a binding contract.

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