How strong a defence is a hold harmless clause in an LOI
State/Country relating to question: Massachusetts
drafting motions to dismiss
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This is a contract dispute arising from investment negotiations. We entered a LOI with the other party who is now suing for breech of contract as I decided not to make the investment. The LOI contains an outline of the proposed investment including possible amounts but leaves requires continued and final negotiation.There are three primary clauses I think:1 A Disclaimer in the introduction paragraph stating: This LOI only provides a framework on which to continue negotiations:2 A clause stating the other party agrees to hold us harmless for any actions or lack of actions they may take prior to a final signed contract.
3) a closing sentence stating this is not a binding agreement and only a separate signed agreement would be a binding agreement: 3 No final agreement was ever reached or signed though we did negotiate for almost a year.
Thanks very much for the additional clarity. So it now appears that the other party is suing to enforce the terms of this non-binding LOI. I'm not sure how a breach of contract action can stand against a non-binding agreement. I also don't know whether the intent of the hold harmless language is to protect the other party in litigation filed by the other party. But it does seem that you would have a good defense to a breach of a non-binding agreement, unless there are potential terms of the LOI that they can validly claim were breached.
Corporate and Business lawyer since 1997
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