Is a letter of intent a binding contract and is the contractor likely to be paid

YOUR UNIVERSITY

Construction Law and the Letter of Intent

BY

YOUR NAME

Department of _________

Your Class

October 23 , 2006 COVER LETTER

It is clear , from reading the case law on the issue of construction-related letters of intent that they have been interpreted in many different ways by different courts . It is also clear that while these letters of intent seems to be a very common component in the construction industry , they can often lead to misunderstandings miscommunications , and one or both parties being disappointed in the

br outcome to the point that the courts must be consulted . While it is widely recognized that it is often necessary as well as very common , for contractors to supplies to enable them to be on the jobsite before a formal contract is signed or to start preparatory work in anticipation of a contract being signed , the bottom line remains that the terms of a letter of intent need to be clearly spelled out , with both parties fully communicating their expectations , and with the wording in the Letter of Intent being so straightforward as to preclude any misunderstandings between the parties . Time limits for the formal contract to be signed need to be in the letter of intent as well as financial caps on what can be spent before the formal contract is signed . If all precautions are taken , and the letter of intent is well thought out and well prepared it can be a useful tool in the construction industry . In the absence of the above , no work should be performed until a formal and binding contract is firmly in place , signed , sealed and delivered by all parties involved

Case law regarding the effect of a letter of intent as relates to construction issues are extensive . There are a variety of reasons why a letter of intent would be issued in a construction situation , and the time it would generally be issued would be in the pre-contract negotiations or immediately following their conclusion . The buyer might wish to ensure that the goods or services he will require for the impending job are reserved to make sure they are available when the job commences , or the materials needed might take a lengthy amount of time to procure , therefore the buyer might wish the contractor to pre- before a formal contract is firmly in place . Further , a letter of intent might have the effect of ensuring the contractor is mobilized and ready to go . Whatever the actual reason , or desire of the person or company issuing the letter of intent , traditionally a letter of content has had little contractual effect in most situations , although there are a certain number of situations where the parties were to be treated as having respective rights and obligations following the issue of a letter of intent , although these cannot be reduced to a single legal proposition (Letters of Intent 2005 . Interestingly , a letter of intent is sometimes known as an if contract ' and that name alone should give...