If I sign a letter of intent, am I actually committed to selling?
Signing a letter of intent (LOI) doesn't usually commit you to actually selling. Most LOIs for a business purchase and sale are drafted so the core deal terms — price, structure, payment timing — remain non-binding until a full purchase agreement is signed, precisely because so much can change once due diligence, financing, and legal review are complete. What an LOI is genuinely designed to do is set out a framework both sides are working toward, not lock in the outcome.
The part that trips people up is that "non-binding" almost never means the whole document is toothless. A handful of specific provisions — commonly confidentiality, an exclusivity or "no-shop" commitment, allocation of costs, and which province's law governs the document — are routinely drafted to be binding even while everything else in the same LOI isn't. Signing therefore can still create real, enforceable obligations, just not an obligation to complete the sale itself.
Because whether you're committed depends entirely on the specific wording used — and poorly drafted LOIs have accidentally bound sellers to more than they intended — it's worth having a Treadstone business lawyer review the document before you sign, not after a dispute over what it actually says.
Key takeaways
- An LOI is typically non-binding on price and other core deal terms.
- Specific clauses — confidentiality, exclusivity, cost allocation, governing law — are often drafted to be binding regardless.
- Signing doesn't commit you to closing, but it can create other real obligations.
- Have a lawyer review exactly what's binding before you sign, not after a dispute.