Enforceability of Non-Binding Letters of Intent: Agreements to Agree and Essential Terms under Florida Law

Introduction

This commentary examines the Eleventh Circuit’s December 18, 2024 opinion in FI Real Estate Fund Two LP v. Donda, LLC, No. 23-13742, which affirms the dismissal of a suit challenging the enforceability of a letter of intent (“LOI”) under Florida law. The dispute arose when FI Real Estate, a real estate investment fund, and Donda, LLC, negotiated over the sale of commercial property in Oak Ridge, Tennessee. After executing an LOI that outlined certain major terms and bound the parties only to “attempt to negotiate” a definitive purchase and sale contract in good faith for fifteen days, Donda withdrew from negotiations. FI Real Estate sued, asserting breach of contract, breach of implied good‐faith duties, declaratory relief, specific performance, and unjust enrichment. The district court dismissed all counts for failure to state a claim, holding that the LOI was an unenforceable “agreement to agree” lacking sufficiently definite essential terms. The Eleventh Circuit affirmed.

Summary of the Judgment

The Eleventh Circuit reviewed de novo the district court’s Rule 12(b)(6) dismissal. Applying Florida contract principles, the court held that:

• The LOI was expressly non‐binding except for a commitment to negotiate in good faith for fifteen days.
• Florida law requires agreement on all “essential terms” for contract enforceability; here, key terms (escrow provider, due‐diligence scope, closing mechanisms) were left open for future negotiation.
• Because the LOI bound the parties only to “attempt” further negotiation and did not fix the price, services, or closing conditions as final, there was no “meeting of the minds” on these essential terms.
• Accordingly, all contract‐based claims (specific performance, declaratory judgment, breach of implied good faith) failed for lack of an enforceable contract, and the unjust enrichment count failed for lack of any benefit conferred on Donda.

The Court affirmed the district court’s dismissal of Counts I–V.

Analysis

1. Precedents Cited

The opinion draws on Florida law and Eleventh Circuit decisions to explain why an LOI that only commits parties to negotiate is unenforceable:

• St. Joe Corp. v. McIver, 875 So. 2d 375 (Fla. 2004)
  Established that a contract under Florida law requires offer, acceptance, consideration, and sufficiently definite essential terms.
• Vega v. T-Mobile USA, Inc., 564 F.3d 1256 (11th Cir. 2009)
  Reiterated Florida’s requirement of definite essential terms for contract formation.
• Dozier v. Scruggs, 380 So. 3d 505 (Fla. 5th DCA 2024)
  Confirmed that parties may bind themselves to future discussions but unless essential terms are settled, no enforceable contract arises.
• Dep’t of Corr. v. C & W Food Serv. Inc., 765 So. 2d 728 (Fla. 1st DCA 2000)
  Held that an agreement to negotiate a lease renewal in good faith is an unenforceable “agreement to agree” where renewal terms remain open.
• Suggs v. Defranco’s Inc., 626 So. 2d 1100 (Fla. 1st DCA 1993)
  Rejected enforceability where “essential terms of an agreement remain open, subject to future negotiation.”
• Allen v. Berry, 765 So. 2d 121 (Fla. 5th DCA 2000)
  Held that continued negotiations over essential terms demonstrate lack of a meeting of the minds.
• Aldora Aluminum & Glass Prods., Inc. v. Poma Glass & Specialty Windows, Inc., 683 F. App’x 764 (11th Cir. 2017) (unpublished)
  Persuasively held that a commitment to reach “acceptable agreements” on important items constituted an unenforceable agreement to agree.

2. Legal Reasoning

The court’s reasoning proceeds in four steps:

1. Identification of Applicable Law. Florida law governs the dispute. FI Real Estate neither challenged this choice nor identified any controlling conflict with Tennessee law.
2. Contract Formation Requirements. Under Florida law, a valid contract must include:
   • An offer and acceptance;
   • Consideration; and
   • Sufficient specification of essential terms (price, subject matter, closing conditions).
3. Assessment of the LOI. While the LOI named the property and proposed a purchase price ($4,200,000), it explicitly disclaimed binding effect except for a 15-day exclusive negotiation window. It left open:
   • The identity of the title insurer;
   • Due diligence scope and timing;
   • Mechanics of deposit and closing;
   • Any final, mutually acceptable contract language.
   Because those elements were not fixed, the LOI promised only to “attempt to negotiate” future terms, making it a classic “agreement to agree.” Florida cases consistently hold such pacts unenforceable.
4. Derivative Claims. All other claims (specific performance, declaratory relief, implied good faith duty, unjust enrichment) rest on the premise of an enforceable contract. With no contract, they fail:
   • You cannot breach what does not exist (no implied duty without contract).
   • Specific performance and declaratory relief require a contract.
   • Unjust enrichment requires conferment of a benefit; here, FI Real Estate conferred none—Donda simply retained its own property status quo.

3. Impact on Future Cases and the Area of Law

This decision reinforces and clarifies Florida’s well‐settled rule that letters of intent:

• Must contain sufficiently definite essential terms to be enforced as contracts.
• Cannot be converted into binding obligations simply by labeling them “in good faith” negotiations or by including a deadline for further talks.
• Affirm courts’ refusal to monetize a party’s expectation of negotiating leverage or “what‐might‐have‐been.”

Practitioners and dealmakers should take heed:

• Draft LOIs with clear demarcation between binding and non‐binding provisions.
• Ensure any binding commitment either fixes all essential terms or explicitly states which elements remain open and non‐binding.
• Consider using interim binding provisions—deposit obligations, exclusivity fees, fees if no definitive contract is signed—to give parties real, enforceable stakes in further negotiation.

Complex Concepts Simplified

• Letter of Intent (LOI): A preliminary document outlining major deal points; may be binding or non‐binding based on language.
• Essential Terms: Core deal elements—price, subject matter, closing date, escrow/trust arrangements—whose absence prevents contract formation.
• Agreement to Agree: A pact to negotiate further without finalizing essential terms; unenforceable because it lacks certainty.
• Meeting of the Minds: Mutual assent on all material contract terms; without it, there is no contract.
• Unjust Enrichment: Equity remedy where one party benefits at another’s expense without contract; requires a direct benefit conferred and inequity if retained.

Conclusion

FI Real Estate Fund Two LP v. Donda, LLC reaffirms Florida’s fundamental contract doctrines: parties must agree on all essential terms to form an enforceable contract, and letters of intent that merely bind future negotiations—even in good faith—are unenforceable agreements to agree. The decision highlights the importance of clarity in preliminary deal documents and will guide practitioners in structuring LOIs to reflect accurately which obligations should carry binding legal effect.