Letter of intent under Norwegian law

The appropriate content depends on the transaction and how far the negotiations have progressed. Certain issues should nevertheless normally be considered.

Purpose and scope
The document should make clear what the parties are seeking to achieve.

For a commercial cooperation, this may involve defining the proposed area of cooperation and the parties' contemplated roles. In an acquisition or investment, the LOI will normally describe the contemplated transaction and its principal parameters.

It is particularly important to distinguish between matters that have already been agreed and matters that remain subject to further negotiation.

Key commercial terms
If the parties have reached agreement on central terms, these should normally be recorded.

In an acquisition this might include the shares or business to be acquired, an indicative purchase price or pricing mechanism, the proposed transaction structure and an anticipated timetable.

In a commercial cooperation, the principal terms may concern responsibilities, contributions, financing or allocation of tasks.

The LOI does not need to anticipate every provision of the final agreement. Its purpose will often be to establish a framework for the next stage of the process.

Outstanding conditions and approvals
The LOI should identify material matters that remain unresolved or must be completed before a final agreement can be entered into.

These may include:

• further commercial negotiations
• satisfactory due diligence
• financing
• board or other internal approvals
• third-party consents
• regulatory approvals
• negotiation and agreement of the final transaction documents.

Clearly identifying these matters can be important in avoiding an unintended impression that a final agreement has already been reached.

Process and timetable
The parties should consider how the next stage is to be conducted.

The LOI may specify deadlines, milestones and responsibility for particular workstreams. In an acquisition, this may include the due diligence process and timetable for negotiating the share purchase agreement or other transaction documents.

Exclusivity
In some transactions, one party may require the other to refrain from conducting parallel negotiations.

This is particularly common in acquisitions, where a buyer may request an exclusivity period while it carries out due diligence and negotiates the definitive transaction documents.

An exclusivity provision is a genuine contractual obligation. Its scope and duration should therefore be clearly defined.

Confidentiality
Negotiations frequently involve the exchange of commercially sensitive information.

The LOI should address confidentiality and permitted use of information unless these matters are already covered by a separate non-disclosure agreement.

This may be particularly important where the parties are competitors or where information about customers, pricing, technology, strategy or other commercially sensitive matters is exchanged.

Costs
The parties may incur substantial legal, financial and other advisory costs before a final agreement is signed.

The LOI should therefore consider how those costs are to be allocated if the transaction or project does not proceed. A common approach is for each party to bear its own costs, but other arrangements can be agreed.

Governing law and dispute resolution
In a cross-border transaction, the LOI should normally specify its governing law and the agreed mechanism for resolving disputes.

This is particularly important where provisions such as confidentiality, exclusivity or costs are intended to be legally binding.

There is no single answer applicable to all letters of intent.

The general starting point is that an LOI will not normally, merely by being entered into, require the parties to enter into the contemplated final agreement. The Norwegian Supreme Court addressed this starting point in Rt. 1995 p. 543 (Selsbakkhøgda).

That does not mean that a letter of intent is legally irrelevant or wholly non-binding.

An LOI may contain a combination of non-binding and binding provisions. The proposed transaction, indicative pricing and other commercial terms may be expressly stated to be non-binding, while provisions on confidentiality, exclusivity, costs, governing law and dispute resolution may be legally binding.

The more useful question is therefore not simply whether the LOI is binding, but what the parties have agreed to be bound by.

This should be stated expressly wherever possible.

Calling a document a “Letter of Intent”, “MoU” or “term sheet” does not by itself determine its legal effect.

Norwegian contract law looks at the content of the parties' communications and conduct and the surrounding circumstances.

This is illustrated by LA-2023-122844, where the Agder Court of Appeal concluded that a document entitled “Letter of Intent (LOI)” constituted a binding agreement for the acquisition of shares. The case illustrates that the heading of the document is not decisive.

If the parties do not intend to become bound to the contemplated transaction until definitive documents have been signed, this should therefore be stated clearly.

The importance of an express signature reservation is illustrated by the Norwegian Supreme Court's decision in HR-2014-247-A (Strømstad Marina). The buyer had made clear that neither party would have a claim against the other if the negotiations did not result in a signed agreement. The Supreme Court held that signature was therefore a condition for a binding agreement, and the buyer was entitled not to sign.

The same applies to other important reservations. If a transaction remains subject to board approval, financing, satisfactory due diligence, regulatory approval or other conditions, these should be clearly identified.

If the LOI makes clear that either party remains free to discontinue negotiations concerning the final agreement, that will normally be the position.

The right to withdraw from the proposed transaction does not, however, permit a party to disregard obligations that it has already accepted.

For example, provisions concerning the following may continue to apply:

• confidentiality
• exclusivity
• permitted use or return of information
• costs
• governing law and dispute resolution.

A breach of a binding provision may give rise to contractual remedies.

It is therefore important to distinguish between freedom to terminate negotiations for the contemplated final agreement and obligations that the parties have already undertaken during the process.

A letter of intent works best when it creates clarity rather than additional uncertainty.

Parties should in particular consider:

• binding versus non-binding terms – specify which provisions are intended to create legal obligations
• outstanding matters – identify issues that remain subject to negotiation or investigation
• conditions to binding effect – make any requirements for signature, board approval, financing, due diligence or regulatory approval clear
• the next stage of the process – address timetable, responsibility, due diligence and any period of exclusivity
• what happens if the process ends – including confidentiality, information, costs and other surviving obligations.

An LOI should not be more extensive than its purpose requires. A short document may be entirely appropriate for an early-stage commercial cooperation, while a significant acquisition may require a more detailed term sheet or letter of intent.

The central objective is to make clear what the parties intend to achieve, what they have already agreed and what remains open.

Originally published 9 March 2025. Last updated 16 August 2026.