Write a letter of intent to specify the content of the contract under discussion

There are written, final agreements. And then, there are letters of intent. What are these meant for? While they’re not as binding as an agreement, these “summaries” are still enforceable as they show intent to negotiate and proceed on good faith.

How Legally Binding is this Letter?

It’s not just meant for a construction agreement. A letter of intent is a kind of a summary between two parties who want to summarized what was agreed upon prior to signing. This means that the agreement hasn’t been formalized. So it’s best to consider the letter of intent more as a notice, a consolidation of terms and an update. This means it’s everyone’s intention to proceed at a later date. As such, this “letter of inquiry” or “concept paper” may show “intent” but is not as legally binding nor as formal as actual agreements. There is definitely a good faith negotiation.

The Guidelines for a Letter of Intent

So how does one craft a letter of intent? First of all, remember: the point of a letter of intent is to establish if there is, indeed, a fit as to expectations and the project between two parties. In other words, is there consensus? Start with a summary statement, the project’s “why”, otherwise known as a “statement of need”, the project activity (i.e. the letter’s “body”), the outcomes, credentials, budgets, and a closing paragraph. This sounds remarkably like a proposal and, yes, to a certain extent, these documents can function as both an update and an actual soft offer.

Keep in mind one last thing about these letters of intent. Yes, they are more informal summaries but can include legal items. While they may not be specific contracts with a signature, their provisions encompass things that [i]are[/i] binding, such as NDAs, governing law and covenants. Make sure to include plenty of disclaimers and keep the structure looser and more informal.