LOIs in FL...Binding?

searcher profile

August 24, 2024

by a searcher from Harvard University - Harvard Business School in Dallas, TX, USA

Hi all,

I recently had a conversation with a lender that said in FL, LOIs are binding. Not clear if this is just the default and you could stipulate differently (for example my LOI template states that the only binding piece is the exclusivity and confidentiality) but has anyone heard this before? I've seen a couple posts about brokers in FL trying to guide buyers straight towards APA vs LOI on smaller deals (<~$1M EBITDA) which would make more sense if LOIs were binding anyway. Relevant as I am working on a deal in which the business is based in FL.. Appreciate any insight!

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commentor profile
Reply by a professional
from University of Virginia in Holmes, NY 12531, USA
Yep, entirely not true, at least not broadly. Depending on the very specific language, there's a chance that certain of the provisions (e.g., confidentiality), might survive termination of the LOI and therefore be binding. Frankly, even APAs can be sneaky. I do note, to be clear - substance >>> forms. If two parties, for whatever crazy reason, sign an LOI that explicitly states that both parties intend and agree to be bound by it, then yeah, that'd be default binding (possibility some other contingencies within that could give an out). If I can be helpful at all, please don't hesitate. All the best, MB
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Reply by a professional
from University of Michigan in Detroit, MI, USA
Hi ^redacted‌, not true in FL, not true anywhere else in the US. The parties have to intend to enter into a binding contract, or else no binding contract is formed. That is why some portions of an LOI are usually binding (e.g., exclusivity), while other portions are not (e.g., buyer's obligations to go through with the deal). Hopefully that helps. Feel free to reach out with more questions either here via my DMs or directly at redacted
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