Letter Of Intent: A Promise Or A Concluded Contract? SC Answers

I. Introduction 

The legal status of a Letter of Intent (“LOI”) has remained as a disputed proposition in law for a long time. Even though LOI’s are routinely employed by commercial parties as the initial step toward the execution of a formal agreement, their effect, whether they culminate in a concluded contract or operate as an expression of an intent to contract in the future, has engaged the courts and stakeholders in long time debates.  

The Hon’ble Supreme Court of India was faced with this question in Maharashtra State Electricity Distribution Company Limited (MSEDCL) & Ors Vs. R.Z Malpani (SLP (C) No. 36889 of 2025). The issue was whether an LOI issued by MSEDCL in favour R.Z malpani resulted in a contract, and whether, an arbitration agreement could be said to exist so as to warrant a filing of Section 11 of the Arbitration and Conciliation Act, 1996.  The judgment marks an important decision with respect to the law governing pre-contractual instruments, particularly in its