Letters of Intent: Principles and Pitfalls

What are the key points everyone should consider before signing a letter of intent?

It can take a long time for the formalities of a professional appointment, building contract or sub-contract to be concluded, and time is money for all parties involved in construction. Employers and contractors want to get started on a project as soon as possible, consequently they frequently resort to sending letters expressing their intention to enter into a formal contract for the entirety of the works in due course. There are a variety of reasons why such letters are resorted to, and why both parties to a contract find them acceptable for their respective purposes.

In the case of the employer, they may wish to get the development started early to reduce the borrowing costs or bring forward the date when the development produces an income, rather than delay the design or commencement of construction until the formal contract has been signed.