Construction projects frequently need to get started quickly, before final documents are agreed.  In these situations, the industry often uses a ‘letter of intent' (“LOI”) as a bridging measure to allow work to proceed and to give the parties some legal protection.  The LOI is then meant to be replaced by the formal contract.

An LOI should never be taken lightly, even if it is meant to be only a temporary arrangement.  If the terms are not drawn properly, the parties may find themselves in dispute or forced into an arrangement that was not contemplated.  After all, an LOI is still a contract.

Unfortunately, more often than not, parties are under intense time pressure to sign an LOI.  This may lead to LOIs being signed with key terms missing or without understanding the repercussions of what is being signed.

Why should I use an LOI?