Sep 30, 2021

SC holds that a Letter of Intent is not Binding Contract Unless Such Intention is Evident From its Terms

The Supreme Court in South Eastern Coalfields Ltd. v. S. Kumar’s Associates AKM (JV)[1], held that a Letter of Intent (‘LoI’) merely indicates parties’ intention to enter into a contract in future. Therefore, no binding relationship emerges at the stage of LoI. However, the Supreme Court clarified that an LoI may be considered as a binding contract provided such intention is evident from its terms, which is clear and unambiguous.

 

[1] 2021 SCC Online SC 486.

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