Clients sign LETTERS OF INTENT quickly

Clients sign LETTERS OF INTENT quickly. The label "non-binding" makes them feel safe.

A letter of intent, term sheet or memorandum of understanding is often presented early in a transaction, sometimes before lawyers are fully involved. It feels like a formality, a handshake on paper. The other side says it is standard. The document itself says it is non-binding.

So it gets signed.

But "non-binding" is not a legal off-switch. It is a label. And under Belgian law, what matters is not only what the document says about itself, but what it contains, what the parties intended, and how they behaved.

Even a "non-binding" LOI creates a legal framework, whether you intend it to or not.

There are two layers to this.

First, specific provisions in an LOI are almost always intended to be immediately binding exclusivity, confidentiality, governing law, jurisdiction, non-solicitation, and process obligations. These exist precisely because the parties want them to apply before any final agreement is reached. Calling the document "non-binding" does not undo them.

Second: under Belgian law, once parties enter into negotiations, they are subject to a general obligation to negotiate in good faith. This applies regardless of what the LOI says about itself. If a party breaks off negotiations abruptly, acts inconsistently, or creates a false impression that a deal is certain, it may face pre-contractual liability, even where no final contract was ever signed.

The LOI does not need to be “binding” to create consequences.

If an LOI is detailed enough, meaning if it identifies the parties, the subject matter, the price, and the key conditions, a court may treat it as a binding agreement in its own right, regardless of the non-binding label. Belgian law looks at substance over form.

Before signing an LOI, it is worth asking:

• Does this document contain enough to be treated as a contract?

• Which provisions are meant to be binding immediately, and is that clearly stated?

• What obligations arise simply from being in negotiations and do we understand them?

• Are we comfortable with the process we are committing to, even informally?