Letter of Intent

A ‘letter of intent’ merely indicates a party’s intention to enter into a contract with the other party in future. No binding relationship between the parties at this stage emerges and the totality of the circumstances have to be considered in each case. It is no doubt possible to construe a ‘letter of intent’ as a binding contract if such an intention is evident from its terms. But then the intention to do so must be clear and unambiguous as it takes a deviation from how normally a ‘letter of intent’ has to be understood.

Jawahar Lal Burman v. Union of India, (1962) 3 SCR 769 and Dresser Rand S.A. v. Bindal Agro Chem Ltd., (2006) 1 SCC 751, if one may say so, are not directly supporting either of the parties.

Hon’ble Justice Sanjay Kishan Kaul, South Eastern Coalfields Ltd. v. M/s. S. Kumar’s Associates AKM (JV), [Civil Appeal No. 4358 of 2016].