How a ‘non-binding’ letter of intent came to be binding after all
For many entrepreneurs, signing a letter of intent feels like a non-binding first step. You set out the broad outlines of the collaboration, state that the document is non-binding, and agree that the details will be worked out later in a final agreement. But what if that agreement never materialises and you simply carry on working together in the meantime? In that case, a court may rule that you are bound by it after all. This is what happened to an Amsterdam restaurant that terminated its collaboration with a well-known chef after fifteen months. The Amsterdam District Court ruled that the parties had, in practice, waived the reservation in the letter of intent, meaning the restaurant could no longer rely on it.
A chef, a restaurant and a letter of intent
The case centres on an Amsterdam restaurant that was not generating enough turnover. At the end of 2023, the operator brought in a well-known chef to turn the tide with a new culinary concept. The parties negotiated the terms and signed a letter of intent in January 2024. This set out (among other things) the chef’s duties, a one-off signing fee of €30,000, a fixed monthly remuneration of €6,250 and a term of five years. Early termination was only permitted in a few specific cases, such as breach of contract or the chef’s bankruptcy, and even then subject to a notice period of twelve months. A detailed consultancy agreement was to follow within a month. Until then, as was expressly stated, there were no legally binding obligations.
Fifteen months of collaboration without a subsequent agreement
That consultancy agreement never materialised. Nevertheless, the parties worked together for fifteen months. The chef developed the concept and the menu, supervised the kitchen staff and helped with the recruitment of a new head chef. The restaurant paid the signing fee and the monthly remuneration, used the chef’s name and presented him to the public as its signature chef. When turnover continued to fall, the restaurant terminated the collaboration in June 2025 with one month’s notice. The chef then claimed his remuneration for the remaining term, amounting to over €340,000.
The restaurant’s defence was as follows. According to its wording, the letter of intent was not binding. As the intended subsequent agreement had not materialised, the document would have lapsed after one month. At most, it constituted an ordinary contract for services, and the client is, in principle, entitled by law to terminate such a contract at any time, according to the restaurant.
Conduct following the signing also counts
The court ruled otherwise. When interpreting agreements, the court looks not only at the literal text, but also at what the parties could reasonably expect from one another in the given circumstances. This also takes into account how they behaved after the agreement was concluded. Legal experts refer to this as the Haviltex test. For fifteen months, the parties had behaved in accordance with the letter of intent, particularly on the points that form the core of a consultancy agreement: what the consultant does and what he receives in return. The judge considered it significant that the restaurant had already paid the signing fee, even though, according to the letter of intent, this was only due upon signing the consultancy agreement. This, amongst other things, showed that the parties attached little importance to the subsequent agreement.
Another factor taken into account was that the restaurant itself had never requested the subsequent agreement. According to the judge, it was in fact incumbent upon the restaurant to press for this, as it had itself stated that it found the letter of intent disadvantageous and incomplete.
In practice, the reservation had been waived. The restaurant could no longer rely on it retrospectively, and the chef was entitled to rely on the agreements being valid, including the five-year term. As the parties had negotiated that term and, specifically, the limited options for termination, the general legal principle that a contract for services may, in principle, be terminated at any time did not apply.
Disappointing turnover was borne by the restaurant
The restaurant also sought the annulment of the letter of intent on the grounds of mistake. It argued that the chef had painted an overly optimistic picture of turnover growth, and that without that representation, the restaurant would not have entered into the agreements in this form. The court rejected that defence. Disappointing results are a future circumstance, and one cannot be said to have been misled in that regard. Furthermore, it had not been established that the chef had provided incorrect information or withheld anything. The fact that he had promoted himself with a success story could not be held against him.
Nor, according to the court, were there any unforeseen circumstances. The restaurant’s financial position was already poor when the partnership began. It was therefore foreseeable that this situation might persist. The parties could have included a provision to that effect, but did not do so.
Finally, the restaurant argued that it would be unacceptable to adhere to the five-year term because of the threat of bankruptcy. That defence also failed. Whilst the restaurant was indeed suffering serious losses, the court found that it had deliberately taken the risk that its financial situation would not improve. It could not pass that business risk on to the chef.
No compensation for the full term
However, the judge was critical of the amount of damages awarded. The chef was not compensated for all the remaining monthly instalments. After all, he was no longer required to work for this restaurant and could fill that one free day per week in another way. The judge estimated that it would take him twelve months to fill that time and awarded compensation equivalent to twelve monthly instalments. After deducting an instalment already paid, the restaurant still had to pay €68,750, plus interest and costs.
The lesson to be learnt from this ruling
Lessons can be learnt from this ruling. A clause such as ‘this document is not binding’ does not protect you in all circumstances. If you proceed to fulfil the agreements set out in a letter of intent anyway – for example, because the contractor carries out the work and the client pays the agreed fees – a court may rule that the reservation has, in practice, been waived and that the agreements are indeed binding on the parties.
Please bear this in mind in practice.
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Source: Amsterdam District Court, 16 September 2026, ECLI:NL:RBAMS:2026:9309
