Every deal begins somewhere short of a signed contract. A term sheet, a letter of intent, a memorandum of understanding — call it what you like — is the document parties exchange to memorialize where they have landed before lawyers draft the definitive agreement. The document almost always says, in one form or another, that it is “not binding” and “not enforceable.” Clients treat that sentence as a force field. It is not. Courts across the country, including in the District of Columbia, Virginia, Maryland, and Florida, have enforced letters of intent that said exactly that — because the parties’ words and conduct told a different story than the disclaimer did. This article explains the analytical framework the District of Columbia Court of Appeals uses to sort binding preliminary commitments from unenforceable agreements to agree, offers concrete drafting suggestions for keeping a letter of intent truly non-binding, and summarizes, in brief, how Virginia, Maryland, and Florida courts approach the same problem.

I. The District of Columbia Framework: Type I and Type II Preliminary Agreements

A. Origins of the Framework. The District of Columbia Court of Appeals has adopted a two-category framework for preliminary agreements first articulated by Judge Pierre Leval in Teachers Insurance & Annuity Association of America v. Tribune Co., 670 F. Supp. 491 (S.D.N.Y. 1987). The D.C. Court of Appeals imported this framework into District of Columbia law in Stanford Hotels Corp. v. Potomac Creek Associates, L.P., 18 A.3d 725 (D.C. 2011), and applied it again in United House of Prayer for All People v. Therrien Waddell, Inc., No. 13-CV-912 (D.C. Mar. 26, 2015). Together, these decisions establish that a document short of a fully executed, definitive contract can nonetheless bind the parties in one of two distinct ways — and that which way a document falls depends on an objective reading of its language and the parties’ conduct, not on a label the parties pasted onto the first page.

B. Type I Agreements — Complete Agreement Awaiting Formalization Only. A Type I agreement exists when the parties have “reached complete agreement (including the agreement to be bound) on all the issues perceived to require negotiation.” Nothing of substance remains open. The parties intend to sign a longer, more formal document later, but that later document is a formality — a restatement of what has already been agreed — not an opportunity to renegotiate. Because the parties have already manifested a present intent to be bound, a Type I agreement is fully enforceable notwithstanding the fact that a more elaborate writing was contemplated, and a party may sue for breach of the underlying transaction itself, not merely for a failure to negotiate.

C. Type II Agreements — A Binding Commitment to Negotiate Open Terms in Good Faith. A Type II agreement is different, and considerably more dangerous for a party who thinks it has signed nothing more than an unenforceable placeholder. A Type II agreement “expresses mutual commitment to a contract on agreed major terms, while recognizing the existence of open terms that remain to be negotiated.” The parties have not finished the deal, but they have bound themselves to something real: an obligation to negotiate the remaining, open issues in good faith, within the framework they have already agreed upon. A party to a Type II agreement cannot force the other side to close the transaction — there is no guarantee a final contract will ever be signed — but it can sue for damages caused by the other side’s bad-faith refusal to negotiate, its unreasonable insistence on terms outside the agreed framework, or its outright abandonment of the negotiation without cause.

D. The Therrien Waddell Application. In Therrien Waddell, a general contractor and a church-affiliated developer negotiated the construction of a building over a period of months. There was no single document titled “letter of intent,” but the parties exchanged bid materials, met to discuss price, duration, and scope, and traded drafts of a construction agreement. The contractor’s bid reserved “the right to negotiate mutually agreeable terms of the construction agreement if selected” even after the basic contract form had been indicated. The D.C. Court of Appeals held that this course of dealing produced a Type II binding preliminary commitment: the parties had agreed on the major terms of the deal, had not resolved every provision of a final written construction agreement, and — critically — had devoted significant time, effort, and resources consistent with treating the arrangement as binding. That partial performance, the court held, “cuts strongly in favor of finding a binding preliminary commitment.” The lesson of Therrien Waddell is not confined to construction bids. Any exchange of drafts, any reservation-of-rights language that implies further negotiation will occur on a defined set of terms, and any conduct suggesting the parties are already proceeding as though a deal exists can be read together to establish a Type II commitment — even without a document that anyone would recognize as a “letter of intent.”

E. The Factors D.C. Courts Examine. Following Tribune, Stanford Hotels, and Therrien Waddell, courts applying District of Columbia law look to a cluster of considerations to decide whether, and in which category, a preliminary writing binds the parties:

• The language of the document itself — whether it uses the vocabulary of commitment (“agree,” “shall,” “binding,” “firm commitment”) or the vocabulary of proposal (“propose,” “anticipate,” “contemplate,” “subject to”), and whether it expressly reserves the right not to be bound until a further, formal document is signed.
• The context of the negotiations — what the parties said and did surrounding execution of the writing, including correspondence and public or internal statements characterizing the document.
• Whether the writing leaves open terms for future negotiation, and how material those open terms are to the transaction as a whole.
• Partial performance — whether either party has already begun to act as though a deal exists (mobilizing resources, commencing work, incurring costs it would not otherwise incur).
• Custom in the relevant business or industry — whether documents of this type are ordinarily treated as binding or as mere placeholders in that particular market or trade.

No single factor controls. A court weighs all of them to decide whether the parties objectively manifested an intent to be bound — in whole (Type I), in part (Type II), or not at all.

II. Drafting Suggestions: Keeping a Letter of Intent Non-Binding. Because D.C. courts look past labels to substance, a party that wants a letter of intent remain unenforceable unless and until the parties execute a definitive agreement should draft with the Type I/Type II factors affirmatively in mind, not merely append a boilerplate disclaimer and hope for the best. The following suggestions are drawn directly from what Stanford Hotels, Therrien Waddell, and their progeny treat as evidence of binding intent — the idea being to eliminate that evidence rather than contradict it.

1. Say it once, clearly, and say it again. State expressly, in a conspicuous and separately captioned paragraph (not buried in a “miscellaneous” section), that the letter is not, and is not intended to be, an offer, a binding agreement, or a Type I or Type II preliminary commitment under District of Columbia law, and that neither party shall have any legal obligation to the other with respect to the proposed transaction unless and until a definitive, mutually acceptable written agreement is executed and delivered by both parties, and specifically stating that . Repeat the substance of the disclaimer immediately above the signature block, where a reader’s eye actually lands.
2. Disclaim any duty to negotiate. Do not promise to negotiate the open terms “in good faith” or “diligently” or “promptly.” That is the precise language Type II liability is built on. Instead, state affirmatively that neither party has any obligation to continue discussions, to negotiate any term, or to execute a definitive agreement, and that either party may terminate discussions at any time, for any reason or no reason, without liability of any kind to the other.
3. Avoid mandatory, commitment-laden verbs. Replace “the parties agree,” “shall,” and “will” with “the parties currently anticipate,” “it is contemplated that,” or “the proposed terms are as follows.” Frame every substantive provision as a proposal or a statement of current expectations rather than a present commitment.
4. Leave something real open — and say so. A letter that resolves every material term of the deal looks to a court, like a Type I agreement dressed up as a draft. Identify, expressly, the categories of terms that remain to be negotiated (financing contingencies, representations and warranties, indemnification, specific schedules or exhibits, board, or committee approval) so the writing cannot be read as “complete agreement on all the issues perceived to require negotiation.”
5. Condition everything on a definitive agreement approved through proper channels. State that the proposed transaction is subject to the negotiation, execution, and delivery of a definitive agreement, and that execution requires the approval of a named body or officer (e.g., the board of directors, a managing member, or outside counsel). This signals that authority to bind the entity has not yet been exercised — and it is factually true in most real transactions.
6. Do not reserve rights in a way that implies a defined negotiation is coming. In Therrien Waddell, the contractor’s statement that it “reserve[d] the right to negotiate mutually agreeable terms” of the contract — offered as a hedge — was read by the court as evidence the parties had committed to negotiate a bounded set of remaining issues. Avoid “reserve the right to negotiate” language; say instead that neither party is obligated to negotiate anything.
7. Control your own conduct, not just your words. Do not begin performance, mobilize personnel or subcontractors, incur transaction-specific costs, or allow the counterparty to do so in reliance on the letter before a definitive agreement is signed. Partial performance is, on its own, powerful evidence of a binding preliminary commitment. If due diligence access or exclusivity is needed before signing, document it in a short, separately labeled agreement that is expressly binding only as to that narrow subject — see the next suggestion.
8. Carve out, expressly, the few provisions you do want to be binding. Confidentiality, exclusivity or “no-shop” covenants, allocation of due-diligence expenses, and choice of law/forum-selection provisions are commonly intended to bind the parties immediately, even while the rest of the letter is not. Say so explicitly: “Notwithstanding the non-binding nature of this Letter of Intent, Sections __ (Confidentiality), __ (Exclusivity), and __ (Governing Law) shall be binding and enforceable in accordance with their terms.” Leaving these unstated risks a court reading the binding intent behind those provisions into the rest of the document.
9. Add a no-reliance / no-estoppel provision. State that neither party may reasonably rely on the letter or any statement made in connection with it, and that neither party waives, and each expressly disclaims, any claim of promissory estoppel, detrimental reliance, or similar theory arising from the letter or the parties’ negotiations.
10. Keep the file consistent with the label. Do not describe the letter internally, in emails, in board minutes, or in press releases as “the deal,” “our agreement,” or “a binding commitment.” Courts read context and correspondence surrounding the writing, not just the four corners of the document, to gauge the parties’ objective intent.

Followed together, these steps do more than repeat the word “non-binding” — they eliminate the factual predicates (definiteness of terms, a negotiation commitment, partial performance, and mixed messaging) that D.C. courts rely on to find a Type I or Type II agreement in spite of a disclaimer.

III. Virginia: An “Agreement to Agree” Is Generally Unenforceable — If the Letter Actually Reads That Way … for now.  Virginia courts start from a similarly protective baseline: a mere “agreement to agree” on essential terms in the future does not create an enforceable contract, and letters of intent and teaming agreements are routinely treated as unenforceable preliminary documents rather than binding contracts. Virginia’s courts, like the District of Columbia’s, look to the objective language of the document rather than a party’s private understanding. This was confirmed in Future of School, Inc. v. Stride, Inc., Record No. 0316-24-4 (Va. Ct. App. Apr. 22, 2025), in which the parties signed a letter of intent describing a proposed multi-year donation. The letter included a checkbox provision stating that it “represents the basic terms for an agreement that shall be considered ☐ binding ☐ non-binding” — and neither box was checked. The Court of Appeals of Virginia nonetheless held the letter was not an enforceable contract, relying on the document’s own precatory language (the donor “wishe[d] to donate” future installments, rather than committing to do so), its title as a “Letter of Intent,” and the overall tenor of the writing, which the court found demonstrated a contemplated future expression of intent rather than a present, binding promise. The case is instructive for two reasons. First, it confirms that Virginia courts will enforce a genuinely non-binding letter of intent as non-binding — the outcome clients expect. Second, and more cautionary, it shows how close the call can be: an unchecked checkbox is not a disclaimer, and if the surrounding language of the letter had used mandatory rather than precatory verbs, the outcome could easily have gone the other way. Virginia practitioners should not treat an ambiguous or unresolved binding/non-binding checkbox as a substitute for an affirmative, unambiguous non-binding statement, and should apply the same drafting discipline described in Section II above — avoiding mandatory language, disclaiming any duty to negotiate, and leaving genuine open terms — to keep a letter of intent outside the zone of enforceability under Virginia law.

IV. Maryland: Four Categories, and a Letter That “Looks” Complete Can Be Enforced Even Without Saying So. Maryland’s highest court, in Cochran v. Norkunas, 398 Md. 1, 919 A.2d 700 (2007), adopted a four-category framework (drawn from Professor Corbin’s treatise) that closely tracks the District of Columbia’s Type I/Type II analysis, but divides the middle ground more finely:

• Category 1: the parties expressly state that they do not intend to be bound until a formal document is executed — not enforceable.
• Category 2: the parties agree on certain major terms but leave other, material terms for future negotiation — ordinarily not enforceable as to the ultimate transaction.
• Category 3: the parties reach definite agreement on all necessary, essential terms and intend a later formal document only as a record or further memorial of that agreement — enforceable, notwithstanding the absence of a signed final contract.
• Category 4: the parties expressly state that the preliminary document itself is a binding, complete agreement — enforceable.

In Cochran itself, a proposed real-estate purchase letter stated that a “standard form Maryland Realtors contract will be delivered… within 48 hours,” language the Court of Appeals of Maryland (Maryland’s highest court, despite its name) read as showing the parties intended to finalize their bargain through that later, formal contract — placing the letter in Category 2 and rendering it an unenforceable “agreement to agree.” Maryland’s courts, however, will enforce a letter of intent that falls into Category 3 without even an express statement that it is binding. In Falls Garden Condominium Association, Inc. v. Falls Homeowners Association, Inc., 437 Md. 422, 86 A.3d 1274 (2015), the Court of Appeals of Maryland held a letter of intent enforceable because it definitively resolved all of the necessary, essential terms of the arrangement between the parties, distinguishing Cochran on the ground that no material term remained open for negotiation. A later, more formal document was still contemplated, but it was superfluous to formation, not a condition of it. The practical point for drafters is the same one that animates the D.C. framework: completeness is dangerous. A letter of intent that resolves every essential term of a Maryland transaction risks Category 3 treatment — and enforcement — even if the document never uses the word “binding” and even if the parties sincerely intended to paper the deal later. As in the District of Columbia, the antidote is to state expressly that the letter is non-binding, to disclaim any duty to negotiate, and to leave identified, material terms genuinely open.

V. Florida: The Essential-Terms Doctrine, and a Disclaimer That Is Usually — But Not Always — Respected. Florida law requires agreement on all essential terms before a contract, including a letter of intent, will be enforced; an “agreement to agree” on core terms left for future negotiation is not a contract. Florida’s courts have applied this rule to letters of intent directly. In Midtown Realty, Inc. v. Hussain, 712 So. 2d 1249 (Fla. 3d DCA 1998), a Florida appellate court held a letter of intent to purchase real property non-binding where the parties continued to negotiate essential terms after signing it and expressly contemplated that a more detailed, formal purchase agreement would follow. More recently, in FI Real Estate Fund Two LP v. Donda, LLC, No. 23-13742 (11th Cir. Dec. 18, 2024), the Eleventh Circuit, applying Florida law, affirmed dismissal of claims arising from a letter of intent that was expressly non-binding except for a fifteen-day commitment to attempt to negotiate a definitive purchase agreement in good faith. When the counterparty walked away during that window, the disappointed buyer sued for breach, specific performance, and related theories. The court held that because essential terms — including the identity of the escrow agent, the scope of due diligence, and closing mechanics — remained unresolved, no enforceable contract for the underlying transaction existed, citing St. Joe Corp. v. McIver, 875 So. 2d 375 (Fla. 2004), and Dozier v. Scruggs, 380 So. 3d 505 (Fla. 5th DCA 2024), for the proposition that Florida law requires agreement on all essential terms for enforceability. Two points distinguish Florida’s approach from a pure label-based rule. First, Florida courts generally do respect an express non-binding disclaimer — the Donda letters carve-out limiting the binding effect to a fifteen-day negotiation window was enforced on its own terms, not disregarded. Second, and consistent with every jurisdiction discussed in this article, the label is not a substitute for incompleteness: a document that a party calls a “letter of intent” or a “proposal” can still be found binding if it in fact states specific, definite obligations and leaves nothing essential open. Florida courts have enforced non-labeled documents — including a proposal that was never called a “contract” — where the writing contained specific rates, obligations, and payment terms, on the theory that a party’s subjective, undisclosed intent not to be bound does not defeat an objectively complete agreement. For Florida transactions, the drafting priorities from Section II above translate directly: state the disclaimer expressly and unambiguously; if any provision (such as a limited exclusivity or good-faith negotiation window) is meant to bind, cabin it explicitly and keep its duration and scope narrow; and, above all, make certain that genuinely essential terms — price mechanics, closing conditions, escrow and diligence procedures — remain open and are identified as subject to future agreement.

VI. Comparative Summary. Despite differences in doctrinal labels, the District of Columbia, Virginia, Maryland, and Florida share a common analytical core: courts look past the title of a document and any boilerplate disclaimer to the objective language the parties chose, the completeness of the terms, and the parties’ conduct, in order to decide whether — and how far — a letter of intent binds them.

Jurisdiction	Governing Standard	Leading Authority	Label Alone Enough?
District of Columbia	Type I (complete agreement) vs. Type II (binding commitment to negotiate open terms in good faith) vs. no binding agreement at all.	Stanford Hotels Corp. v. Potomac Creek Assocs., 18 A.3d 725 (D.C. 2011); United House of Prayer v. Therrien Waddell, No. 13-CV-912 (D.C. 2015).	No
Virginia	“Agreement to agree” on essential terms is unenforceable; objective language and tone (mandatory vs. precatory) control.	Future of School, Inc. v. Stride, Inc., Record No. 0316-24-4 (Va. Ct. App. Apr. 22, 2025).	No
Maryland	Four Corbin categories, from express non-binding through express binding; a letter resolving all essential terms is enforceable even without saying “binding.”	Cochran v. Norkunas, 398 Md. 1, 919 A.2d 700 (2007); Falls Garden Condo. Ass’n v. Falls Homeowners Ass’n, 437 Md. 422, 86 A.3d 1274 (2015).	No
Florida	Enforceability turns on agreement to all essential terms; an express non-binding carve-out is generally honored on its own terms.	Midtown Realty, Inc. v. Hussain, 712 So. 2d 1249 (Fla. 3d DCA 1998); FI Real Estate Fund Two LP v. Donda, LLC, No. 23-13742 (11th Cir. Dec. 18, 2024).	No

Conclusions and Recommendations. A letter of intent is not made non-binding by the sentence that says so. In the District of Columbia, Virginia, Maryland, and Florida alike, courts read past the label to the substance of what the parties wrote and did. A party that wants its preliminary document to remain exactly that — preliminary — needs to draft it that way from the first paragraph to the signature block: unambiguous, repeated disclaimers of binding effect and of any duty to negotiate; conditional and precatory rather than mandatory language; genuinely open, identified material terms; express conditions requiring a definitive agreement and proper corporate approval; carve-outs, clearly labeled, for any provisions the parties do want to bind them immediately; and conduct that matches the words on the page. Anything less, and a court applying Type I/Type II analysis — or its Virginia, Maryland, or Florida equivalent — may hold the parties to a deal, or at least to a duty to negotiate one, that they thought they were free to walk away from. So, what is the answer and what to do to avoid even the possibility of any writing obligating the parties? Our suggestion is to either put nothing in writing (not typically a good answer) or to have the “other party” “apply” or “request consideration” for the transaction. For example, a would-be tenant or a would-be purchaser “applies” or “requests consideration” to lease/purchase upon the following terms.” All that said, the other party should NEVER sign the “application” or the “request.” Keep it simple!