It Ain’t Over till the Fat Lady Sings – aka a Letter of Intent is Not a Contract

Disclaimer

I wrote this mid week (it’s now the weekend), so the content is stale. Regardless, I don’t want to waste any writing, so am posting it.
This is a NON lawyer’s point of view. It is a personal opinion, not reflective of employers past and current etc.

Summary

TLDR: The primary difference between a letter of intent (LOI) and a contract is that an LOI is non legally binding. Often, the devil is in the details. The details are where disagreements emerge on commercials, indemnification, limitation of liability (and more legal issues). Sometimes, gnarly information is discovered in the due diligence that deters the buyer from the deal.

Definition of an LOI

A letter of intent (often abbreviated to LOI) is a document that records the intentions of all the parties who are considering entering into a legally enforceable agreement [1].

Or another definition:

(An LOI) is a document drawn up when two parties come to a mutual agreement, but haven’t worked out all the details yet. This letter is presented before the finalized legal agreement, which means that a letter of intent is not legally binding. However, it does indicate a commitment between two parties and the terms they intend to follow. [2]

Deeper dive into LOI vs Contract

Differences between LOI and Contract

Implications of an LOI not being a contract: wait for contract signature

Now outdated statement: So while Binance buying FTX could happen, I hope that people will not speak of it as a past tense / done deal. Even if there’s a 99.9999% chance it happens, it has not happened (as of writing, Nov 9, 2022).
Forward looking: Much has transpired since Nov 9 and is spiralling. One lesson for all – please do not write the headline
“XXX buys YYY” when there’s an LOI. It’s not over till the fat lady sings and the contract is signed.

[1] https://www.netlawman.co.uk/ia/letter-intent

[2] https://ironcladapp.com/journal/contracts/letter-of-intent/

[3] Edge cases exist, but generally not (from my Google-desk-research). Please consult a lawyer for any deeper research or questions.