Question about letter of intent ??

Hi Jihad

It all depends on what the letter contains.

Either they can be completely meaningless or create a binding acceptance.

If the letter of intent/acceptance contains the following matters:

1.   A clear description of the scope of work - say by reference to the bnid document.

2.  The time to complete with start and completion dates

3.  The money to be paid

4.  A reference to the contract terms to be applied

Then you have a binding contract.

The contractor can accept the terms by starting work - no actual contract needs to be signed.

If any of the 4 sections are missing or unclear then there is no basis for a contract and the contractor should procede with caution.

Best regards

Mike Testro

Jihad,

Letter of intent - this says basically you are not in contract but intend in the future to enter into a valid contract with the party. Avoid using if at all possible as you can very easily and mistakenly end up accepting and forming a valid contract that at that point in time you did not intend to. These are a bit of a mine field legally.

Letter of acceptance - is confirmation that you accept the other party's offer and a legally binding contract is formed by this letter. Note this can happen well before the contract is physically signed.

Hi Mike,

I am currently working for a nominated subcontractor in a building project.

Can I ask if the date of work start contractually from the date of issue of LOA or from the date of signing the LOA ?

If I was issued on 31th Jan 2011, but only signed on 29-Feb-2011, what is the contractually recognised start date to regularization of work ?

If the LOA does not specifc my start and completion date but some milestone for the main contractor, contractually what will my LD be linked to since it was never specific in the LOA.

And it has been almost 6 months we have started work and  yet to formally signed a contract.

Thanks

Hi CH

You don't have to sign a contract for it to become binding.

If there is no date specified in the LOA and there is no start date anywhere else in the contract documents then the day you started work is the effective date.

This is known as Agreement by Conduct.

And it is not necessarily physical work on site.

Deployment of staff - starting design - surveys - placing orders etc could all be construed as Agreement by Conduct.

It is important that you get your start date recorded and agreed ASAP

Best regards

Mike Testro

Hi Mike,

Currently all the projects in my company is facing this problem where we are not getting any formal LOA and contract from the client.

Just as you mention by agreement of conducts, we have deployment of staffs and starting on design issues, and I am taking record of all this details into my programme and listing them under pre-award activities and mobilisation.

However in my opnion the regularization of work will only begin after the issue of LOA. Thus if we have a subcontract duration of 12 months, that will take effective from the issue of LOA, the pre-award activities will not constitute within the 12 months.

Which means I will have a programme 3 months pre-award stage and 12 months contractually start from date of LOA.

Am i in teh right direction ?

Hi CH

Be careful that when the LOA is issued and then states start dates that were earlier than actual.

You will automatically be in delay.

Inform the Main Contractor of you actual start dates and record progress.

Best regards

Mike Testro