Letter of intent (LOI) meaning

This checklist outlines the principal points an employer should assess, and the provisions it ought to require, to achieve a clear and binding letter of intent (LOI) on a construction project. Although the terms ‘contractor’ and ‘employer’ are used, the same approach applies to arrangements between a contractor and a sub-contractor. When drafting and negotiating an LOI, not every matter listed will be relevant; each should be considered in light of the specific circumstances. See Practice Note: Letters of intent—construction for further detail on letters of intent and, for an example of client guidance, see Precedent: Advice to clients—use of letters of intent. Key issues and clauses Parties’ particulars: Check that the employer’s and contractor’s full details are set out at the start of the LOI (including exact company names and, where appropriate, the company number) to prevent any doubt about the identity of the contracting parties. If either is within a corporate group, ensure the correct group company is named as the contracting entity... ...

A letter of intent (LOI) can be put in place before the formal agreement and signing of a building contract (or sub‑contract) so that certain design tasks and/or works may commence at an early stage as necessary and appropriate. This Checklist outlines the principal points a contractor should weigh and the drafting it ought to seek, or ask to be inserted, to secure a clear, binding letter of intent on a construction project. Although the terms ‘contractor’ and ‘employer’ are used, the same principles also apply to dealings between a contractor and a sub‑contractor. When negotiating or preparing a letter of intent, not every point listed below will be pertinent; users must assess each matter against the particular circumstances. See Practice Note: Letters of intent—construction for further guidance on letters of intent. Key issues and clauses Are the parties’ particulars fully and accurately recorded? Make sure the employer’s and contractor’s full details are set out at the start of the letter of intent (including full company...

In this issue: Standard form contracts Building safety Expert witnesses Construction industry news Daily and weekly news alerts New and updated content Construction trackers Standard form contracts CLLS publishes 2024 edition of Letter of Intent The CLLS has released the refreshed 2024 edition of its Letter of Intent. Our commentary reviews the revisions made. See News Analysis: City of London Law Society publishes 2024 edition of Letter of Intent. Court refuses declaratory relief in JCT termination payment dispute (Shaylor v Valesecure) In Shaylor Group Ltd (in administration) v Valesecure Property Ltd (in liquidation) [2024] EWHC 750 (TCC), the Technology and Construction Court declined to issue declarations regarding the contractor’s right to payment after the termination of a JCT-based contract. In doing so, the court explored noteworthy issues of contractual interpretation, including the methodology for assessing sums owed to the contractor post-termination and the impact of an ineffective assignment by the employer. See News Analysis:...

In this issue Advertising, marketing and sponsorship Contracts E-commerce International Supply of services Daily and weekly news alerts New and updated content Dates for your diary Trackers Latest Q&As Advertising, marketing and sponsorship ASA rulings—21 February 2024 The Advertising Standards Authority reviewed a complaint about a paid Facebook ad for Happyo, a behaviour programme targeting individuals with ADHD. The ASA questioned whether the ad complied with the CAP Code and if it risked discouraging necessary ADHD treatment, and the complaint was upheld. See: LNB News 21/02/2024 50. Contracts Contractor was bound by cap in letter of intent (CLS v WJG Evans) The Technology and Construction Court held that no formal construction contract was concluded for the development, leaving the parties operating under a letter of intent (LOI). As a result, the contractor’s remuneration was limited to the LOI cap, which was below its assessment of the value of the completed...

Balfour Beatty Regional Construction Ltd v Van Elle Ltd [2021] EWHC 794 (TCC) What are the practical implications of this case? This ruling illustrates the problems that can emerge when a sub-contractor (or indeed a consultant or surveyor) issues its own terms and conditions with an initial quotation for works or services, and the later agreement does not contain an effective entire agreement clause and/or leaves scope to argue that the contractual scope does not cover every aspect of the works actually undertaken on the project. The judge found—by reference to the wording of an LOI entered into after the original quotation, the terms of the sub-contract when concluded, and the parties’ conduct in invoicing—that there was a single contract. Nonetheless, practitioners should ensure inclusion of a clear entire agreement clause that expressly states previous agreements are superseded (see Practice Note: Entire agreement clauses). Alternatively, if particular elements of the works are intended to be excluded, that should be made explicit in the scope description...

Heads of terms This Practice Note explores heads of terms (frequently called a memorandum of understanding (MoU), letter of intent (LOI), comfort letter, pre-contract protocol, term sheet or heads of agreement) within commercial transactions. It examines what heads of terms are, how courts assess whether they are legally effective, the familiar label ‘subject to contract’, methods for creating binding provisions, the obligation to negotiate in good faith, and the clauses commonly included. It also looks at which provisions are typically meant to be binding and offers drafting guidance on points to weigh and include. This Practice Note further explains how the final contract should supersede the heads of terms. For heads of terms for a commercial arrangement and drafting commentary, see Precedent: —commercial contracts. We have created a collection that is a comprehensive, interactive tool for managing contracts across their key lifecycle phases: negotiation, creation, review, variation and termination. It sets out the principal considerations and the procedures for negotiating, reviewing, varying, assigning, novating or terminating those...

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z LADs Refer to Liquidated and ascertained damages (LADs or LDs). Late Payment of Commercial Debts (Interest) Act 1999 The Late Payment of Commercial Debts (Interest) Act 1999 grants a statutory right to recover interest on overdue sums. See Practice Notes: Remedies for non-payment under construction contracts and Late Payment of Commercial Debts (Interest) Act 1998. Latent defects Flaws inherent in a property’s design or construction that are not evident upon inspection. See Practice Note: Latent defects. Latent defects insurance Cover that insures against damage to a property arising from latent defects which emerge during the policy term. Such insurance typically runs for 10 or 12 years from practical completion and is arranged on payment of a single premium...

Strictly private and confidential To: [ Insert name of Customer party ] (a company registered in [ England and Wales ], with company registration number [ insert ] whose registered office is at [ insert address ]) (you). [ Insert customer address ] Date: [ insert date ] Subject to contract (except as expressly stated) Dear [ insert name ] Letter of intent regarding proposed outsourcing agreement Further to discussions between you and [ insert name of Supplier party ] (the Supplier) on [ insert date(s) ], and subject to contract (except as expressly stated), this Letter of Intent (LOI) outlines the principal commercial terms provisionally reached between our organisations (collectively, us or we) in relation to a proposed agreement for the delivery of [ insert description ] outsourced services (the Services) (the Proposed Agreement). We each agree that: 1 Duration and status We intend to negotiate and, subject to each party’s written agreement in its sole discretion, execute...