Preliminary Agreements

Summary

Disputes over whether or not documents that are not intended to reach the parties' ultimate contractual objective have contractual significance — sometime these documents are loosely classified as "preliminary agreements" — are among the most common in the law of contracts. One court has explained: "Indeed, it is difficult to generalize about the legal effect of preliminary agreements. They can cover a broad scope of agreements, ranging in 'innumerable forms and variations' from letters of intent which presuppose that no binding obligations will be placed upon the parties until final contract documents have been signed, to firm binding commitments which, notwithstanding a need for more detailed documentation of agreement, can bind the parties to adhere in good faith to the deal that has been agreed." Burbach Broad. Co. v. Elkins Radio Corp., 278 F.3d 401, 406-07 (4th Cir. 2002). This practice note discusses such preliminary agreements.