When discussing letters of intent, this blog has so far focused almost exclusively on the current (dire) examples in use in the UK construction industry. These are mostly a mish mash of types of contract, cobbled together and sent with fingers firmly crossed behind the sender’s back.
After talks on letters of intent, I often get sent examples from around the world. Orla Hegarty, Course Director in the School of Architecture, University College Dublin, alerted to me to the Irish Government’s Model Form ‘Letter of Intent’ following a chat on twitter.
The Model Form has very little in common with UK letters of intent:
- it is marked ‘subject to contract/contract denied’. This means it cannot form the basis of any legal agreement
- it precedes a letter of acceptance and expressly states that the client has not accepted the contractor’s tender
- it asks for certain documents to complete the contract eg bond, evidence of insurances
- it recites any other conditions before the contract can exist
- it does not authorise or instruct any works
- it does not permit the contractor to go to the site
This is a pre-cursor to a contract and does not create any obligation to pay for anything.
The Employer’s instructions state that there is no obligation on a client (or contracting authority) to issue this type of ‘Letter of Intent’. However, it also states:
It is recommended as good practice to use a Letter of Intent. This is because it allows a contracting authority time to ask for particular information to be provided well in advance of the award of the contract ... Also this is a very effective way to getting vital information well in advance of awarding a contract.
As I advise my clients, it is not the name of a document that determines its effects, but its contents and its use.
What should you do?
Before you sign a letter of intent ask yourself:
- What is the aim of this document?
- Does that aim fit my agreed contract strategy or contract processes?
- Is there a better way of achieving the same aim?
What would you do?