SSS · Transaction Advisory

Does signing a letter of intent (LOI) bind me?

Most provisions of a letter of intent are not binding, because until the final agreement the parties do not intend to be bound. But clauses such as exclusivity, confidentiality, cost-sharin…

Updated · July 20261 min readCategory · Transaction Advisory
Short answer

Most provisions of a letter of intent are not binding, because until the final agreement the parties do not intend to be bound. But clauses such as exclusivity, confidentiality, cost-sharing and governing law and dispute resolution are deliberately drafted to bind, and breaching them can create liability under the Turkish Code of Obligations (No. 6098). Exc…

Most provisions of a letter of intent are not binding, because until the final agreement the parties do not intend to be bound. But clauses such as exclusivity, confidentiality, cost-sharing and governing law and dispute resolution are deliberately drafted to bind, and breaching them can create liability under the Turkish Code of Obligations (No. 6098). Exclusivity in particular can narrow your negotiating room by stopping you talking to other buyers for a set period.

There is a further point: under the principle of good faith, breaking off a serious negotiation without justification can give rise to liability for culpa in contrahendo — fault in contractual negotiations. A short review before signature that establishes exactly which provisions bind protects the ground for the negotiation that follows, and keeps you from giving undertakings you never meant to give.

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This content is for general information only and does not constitute legal advice. Please contact our team for an assessment of your specific circumstances.

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