When things go wrong with letters of intent, the consequences depend on which side of the project you are on.
It all depends on your perspective:
- Wrong for a client means the project starts (and ends) late or there is no contract – no contract means it may have to pay for works which are late, defective and over-budget!
- Wrong for a contractor means the full contract is never signed. Either the contractor has no right (and no obligation) to continue the project; or it finishes anyway and has no idea how much it will get paid for the works it has completed.
- Wrong for the contract administrator means allowing works to continue under a letter of intent without the client understanding the risks, which may be negligent.
- Wrong for a funder means lending money when there is no real contract, no warranties/third party rights, and the risks to its borrower are not being managed.
- Wrong for an adviser might mean a claim for costs not recoverable against a defaulting party due to a lack of proper contract.
What should you do?
If you want to minimise letter of intent disputes, then you need to create a clear contract strategy, create a better letter of intent and use it wisely. Grab my free video series or book if you need more help.