5 SIMPLE STEPS TO MAKE LETTERS OF INTENT WORK FOR YOU, CREATE TRUST & AVOID DISPUTES

In this video you will get a step-by-step process to help you gain trust and avoid disputes. Almost all disputes on letters of intent come from bad drafting or poor use – this video tackles those things head on.

Step 1: Review Your Letter

You should not recycle a letter of intent from a previous project, or copy and paste a specific term, without knowing whether that letter or term is any good, indifferent or dangerous. You need to identify and diagnose the dangerous letters before you use them. You need the STAR Checklist which covers four areas your letter of intent should cover: scope, terms, aims and risks.

Step 2: Creating a Contract

Contractors want and need a legally binding contract before they start any works to ensure they get paid. That’s where letters of intent come in – a temporary, quick fix solution until the ink is dry on the project contract.

Only about a third of letters of intent (in 25 leading cases) were decided by the courts to be contracts under English law. The five essentials you need for a contract are offer, acceptance, intention, consideration and certainty (this is the real villain for letters of intent).

Stage 3: Revise or Redraft

Assuming you have one of the current samples, you will need some help revising, redrafting or rebuilding that letter to create STAR content.  The critical contents for any letter of intent to create certainty are: parties (employer and contractor), price for the initial works (not reasonable costs), the scope of the initial works, and the time for starting and completing the initial works.

You really can keep it simple and build a letter of intent yourself.

Stage 4:  Ask Better Questions

Can you just get going? You should first check whether you should be using a letter of intent at all … isn’t it better to agree first and start work later? You need to use them sparingly and ask some searching questions before sending it.

To decide if this is the right time to send it the minimum you should ask if a quick start is critical. You should check everyone understands the risks of using a letter of intent. You should check whether the basic terms for the full contract are agreed. And you need to double-check that your stakeholders will approve of using a letter of intent.

Stage 5: What Not to Do

If you only remember one thing, it should be that there are no guarantees that the project contract will be signed. You can’t sit back once your letter of intent is sent. You need to take action. My top tip is to arrange a completion meeting before the initial works are due to be completed, and make sure no-one goes home until the contract is either signed or the contractor is asked to end the initial works.

Use letters of intent wisely to avoid storing up problems that are worse than the time problems you are trying to resolve.