Most letters of intent start with the all too familiar words “….it is our intention to enter into a contract with you for….”. If this is all the letter says then, as far as a contractual obligation to pay you is concerned, it doesn’t amount to much. It is simply what it says on the time, i.e. an expression of an intention to do something in the future is simply not binding on a party.
A binding letter of intent should be clear and concise bout telling you what your client wants from you and what you may expect in return. Never assume anything. If the letter of intent does not confirm a right, that right simply does not exist.
An example being the right of a Sub-contractor to receive interim payments as the work proceeds but, without such a provision being incorporated in to the letter of intent, there is simply no entitlement to interim payments?
What documents and drawings are you working to? What if you end up in dispute? What if the contract is cancelled? Where do you stand? All very real examples as to how things can quickly spin out of control so easily? Keep Reading →