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A binding letter of intent, written to meet the tips set out in this article, is a "formal contract". It is not as comprehensive as the contract intended in the tender documents or contract strategy, but it still binds the parties.

To make that temporary contract the best it can be, it should create certainty about:
- the works to be carried out with absolute clarity, rather than woolly phrases like "preparatory works" or "such works as are needed to meet the project timetable". Ideally refer to the Specification or Works Documents
- when those works should start and when the employer can expect them to be complete. This means the contract administrator can tell if the contractor is helping the project finish on time or dragging its heels
- the price the employer will pay for those works eg by reference to a price analysis. If the formal contract is signed then that will determine the price paid. if not, then "reasonable costs" may over-compensate the contractor.
- the employer's right to terminate the authorisation under the letter of intent if the formal contract documents are not signed by a specific date. As the article states, the employer should not allow work to continue but that needs to be combined with a firm right to ask the contractor to leave.

For most letters of intent, the key risk is that the letter rumbles on and is never superseded. The drafting can avoid this risk.

Sarah Fox
500 Words Ltd