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Does a letter of intent to lease equal a promise of lease?

It is important to remember that a letter of intent is equivalent to a promise, and a promise made is a debt to be repaid.

«A promise made is a debt to be paid»
Proverbe africain

The signing of a commercial lease is often preceded by a signed letter of intent to rent by both parties. Does this letter amount to a lease agreement?

Therefore, a tenant, after several drafts of the letter of intent, finally submits a duly signed final version to the landlord. This final version, countersigned by the landlord, includes a clause stating that the lease will be prepared by the landlord and will include the information contained in the letter of intent. Upon signing, the landlord begins significant renovations according to the tenant's wishes. Meanwhile, following an agreement between the representatives of the parties regarding the terms of the lease, the landlord insists that the tenant take possession of the premises and sign the final version of the lease. The tenant, claiming to have not obtained financing, requests a delay in the signing of the lease.

The landlord turns to the Court* and seeks damages and compensation from the tenant. The court concludes that the letter of intent signed by the parties is a promise to contract under the Civil Code of Quebec, and that the mutual intent of the parties was to be formally committed to signing a lease. The tenant is ordered to pay the landlord the sum of $729,000 for loss of rent and the cost of improvements made by the landlord.

It is important to remember that a letter of intent is equivalent to a promise, and a promise made is a debt to be paid.

François Forget, notary and legal advisor as well as the entire Notaire-Direct team, are at your service to ensure the preparation of your legal documents and answer all your legal questions.
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