The fundamental purpose of a letter of intent is to help you do business by getting your project underway quickly. There is a right way to start your project quickly and a wrong way.
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Let’s assume you (acting for the paying party, whether that’s the developer/client or the contractor) use an existing letter of intent. Once it receives your letter, the supplier will need to decide what it is going to do with it. The supplier can either:
- accept your letter as written and risk missing a legal clause that will come back to bite it, or
- negotiate the terms of your letter and risk missing the deadline to start your project.
The supplier is caught between a rock and a hard place! If it is in any doubt, it may start work but it won’t sign your letter.
A simple 500-word letter of intent creates trust between the paying party and its supplier.
Even a supplier working under severe time pressure has enough time to read and understand the 500 words that comprise the agreement. It can decide in minutes whether your letter records the key elements accurately. It knows your letter is not concealing any onerous terms or legal nasties.
Trust means your project is more likely to be a success.
After the supplier has read (and understood) your 500-word letter of intent, it will have the confidence to either:
- accept your letter as written – knowing that it hasn’t missed a legal nasty, or
- quickly negotiate some of the terms of that short letter, but still meet the project start date.
What should you do?
You can start your project the right way by writing a legally binding, temporary and effective letter of intent. Read Parts B and C of How to Write a Simple and Effective Letter of Intent in Just 500 Words, and then make sure you use it properly (Part D).
This post is taken from Chapter 5 of the book listed above which is available from Amazon in paperback or kindle editions.