Parties want a letter of intent ("LOI". Usually a LOI is not binding as its precatory thinking. So i plan on adding a consideration clause and non-compete language to the LOI. Any problem? Its starting to look like an option, even though its called a LOI

Its a contract, so you can structure it anyway you want. LOIs usually dont have consideration. Adding it wont hurt the contract, but will give it more teeth, if you will. Think substance over form. It will work as long as you make it so.

A letter of intent is essentially a contract, so anything can be negotiated, even adding consideration. Adding consideration is a good idea if you want it to be a valid contract.

Consider the following provisions to help made your letter of intent binding:


No Conflicting Obligations.
a. Owner and Seller represent and warrant to Purchaser that (i) neither of them has entered into any letter of intent, agreement, or understanding (except this Letter) pursuant to which any person or entity has obtained the right to acquire any portion of the [capital stock / membership interests] or assets of Seller (other than in the ordinary course of business), or which would otherwise prevent or restrict Seller or Owner from entering into this Letter and performing as contemplated under it, and (ii) the execution, delivery, and performance of this Letter by Owner and Seller will not breach, violate, conflict with, or permit the cancellation of, any agreement to which the Owner or Seller is a party or by which Seller or Seller’s properties are bound.

b. For and in consideration of Purchaser preparing and entering into this Letter and undertaking to investigate the business and assets of Seller and to incur related expenses, until the termination of this Letter in accordance with its terms, Owner or Seller will not solicit or entertain discussions with any other person regarding the reorganization, sale, or other disposition of the assets or capital stock of Seller.

If you want the letter of intent to be binding, then set a closing date and penalty for failure to close.

Thanks all!