Legal Question in Business Law in New York

Re: letter of agreement

A well-drafted LOI would make it clear exactly which provisions are binding and which are not. Typically the key business decision (to buy, to sell, etc.) would be subject to one or several conditions (satisfactory completion of due diligence, approval of the board of directors, etc.). Certain other auxiliary temporary provisions (such as exclusivity, standstill, confidentiality, non-solicitation, etc.) are often binding for the term of the LOI. A poorly drafted LOI is an invitation to litigation and judges may be a poor substitute for the parties themselves to decide on which provisions were meant to be binding.

Bottom line: have your legal counsel review the document even if it says somewhere that it is "non-binding" or "preliminary."

Re: letter of agreement

A letter of agreement can be an entire contract or not. Many people miss the concept that a contract is merely an agreement, mutual promises, and the exchange of consideration. If the letter agreement is signed by both parties to the agreement there is no statute of frauds problem, and you could sell a house that way.

If the party who is responsible for performing has not signed, or his promises are not fully spelled out, that is where you have a problem.