Letters of Intent in Modern Commercial Transactions - Working Paper No. 7 - Looking at the Past to Improve the Future

Sep 16, 2026

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Based on comparative approaches and case studies, the paper analyzes the system of letters of intent (LOIs), highlighting their advantages and potential while addressing controversial aspects. It focuses on how to define a LOI as an enforceable and binding document by proposing a “three-tier test” covering contract formation, a “de facto contract” assessment, and good faith. Findings show enforceability when at least one test is satisfied, emphasizing good faith, limits of choice-of-law for transnational LOIs, and the need for specific civil-code provisions.

LanguageEnglish

CategoryLetters

FormatPDF

Pages61

Reading Time21 min

AccessFree to download

Introduction

CHAPTER I: THE CONTROVERSIAL NATURE OF LOIS

I.1 Overview on LOIs

I.2 The most important problems arising from the system of LOIs

CHAPTER II – LOIs IN COMPARATIVE PERSPECTIVE

Working Paper N°7 Letters of intent in modern commercial transactions. Looking atthe past to improve the future Elena Tironi International Training Centre [www.itcilo.org](www.itcilo.org) International Training Centre of the International Labour Organization Viale Maestri del Lavoro, 10 10127, Turin, Italy [www.itcilo.org](www.itcilo.org) The Working Paper of the Turin School of Development is part of a wider effort by the International Training Centre of the ILO to contribute to the development policy dialogue through a wide dissemination of research findings of its staff, postgraduate course participants, partner institutions and external collaborators. Papers are selected for publication on the basis of originality, technical soundness and policy relevance. This paper was originally written by Elena Tironi under the supervision of Marina Motta in partial fulfilment of the requirement of [the LL.M. in](the LL.M. in) International Trade Law, Contracts and Dispute Resolutions offered by the Turin School of Development of the International Training Centre of the ILO in partnership with the University of Turin, the Istituto Universitario di Studi Europei and the United Nations UNCITRAL. More information on the Masters Programme is available at [http://tradelaw.itcilo.org/](http://tradelaw.itcilo.org/) . Copyright © International Training Centre of the ILO, University of Turin, Istituto Universitario di Studi Europei and the United Nations UNCITRAL, 2017 The aim of this publication is to stimulate development policy dialogue. Materials in this publication may be freely quoted or reprinted with proper acknowledgement and reference to the document. Publication in the Working Paper of the Turin School of Development does not preclude the authors from subsequently publishing the papers in peer-reviewed journals, books and other venues. Suggested citation for this paper Tironi, E. 2017. Letters of intent in modern commercial transactions. Looking at the past to improve the future. Turin School of Development Working Paper No. 7. International Training Centre of the ILO, Turin, Italy. Disclaimer The designations employed in this publication and the presentation of materials do not imply the expression of any opinion whatsoever on the part of the International Training Centre of the ILO or its partner institutions concerning the legal status of any country, area or territory or of its authorities, or concerning the delimitation of its frontiers. The responsibility for opinions expressed rests solely with their authors, and publication does not constitute an endorsement by the International Training Centre of the ILO or its partner institutions of the opinions expressed in them. Reference to names of firms and commercial products and processes does not imply their endorsement by the International Training Centre of the ILO or its partner institutions, and any failure to mention a particular firm, commercial product or process is not a sign of disapproval. LETTERS OF INTENT IN MODERN COMMERCIAL TRANSACTIONS . LOOKING ATTHE PAST TO IMPROVE THE FUTURE Elena Tironi Corresponding author: E-mail: [elenatironi1990@gmail.com](elenatironi1990@gmail.com) Abstract Based on comparative approaches and case studies, this paper analyzes the system of letters of intent (LOIs), underlining their advantages and potentialities but also their controversial elements, and to make suggestions to improve the future of this legal instrument. In particular, it deals with the problem of defining a LOI as an enforceable and binding document. To this respect, the paper introduces a “three-tier test” composed of test on contract formation; test on “de facto contract”; and test on good faith. It demonstrates that a LOI can be considered enforceable as a contract if it satisfies at least one of these tests. In conclusion, I will demonstrates the importance of the adoption of the concept of good faith in all count

FAQs

What is the main focus of the paper on letters of intent (LOIs)?

The paper analyzes the LOI system and addresses how LOIs can be defined as enforceable and binding documents.

How does the paper determine whether a LOI is enforceable?

It introduces a “three-tier test” involving contract formation, a “de facto contract” test, and good faith, concluding that enforceability can follow if at least one test is met.

What are the key challenges discussed for transnational LOIs?

The paper highlights difficulties in resolving transnational LOIs completely through the “choice-of-law” mechanism and argues for specific LOI provisions across civil codes.

Sep 16, 2026

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