In construction, what is a 'letter of intent'?

A 'letter of intent' serves as a preliminary agreement that signals the intention of one party to enter into a formal contract with another party. It typically outlines the basic terms and conditions that both parties have discussed or agreed upon, but it is not a final or binding contract. This document is crucial in construction projects because it allows work to commence before the final contractual obligations are finalized and signed, providing a level of assurance for both the contractor and the client.

In many cases, a letter of intent can expedite the start of certain activities, ensuring that timelines can be met without waiting for all detailed negotiations and approvals to conclude. It often covers key elements like scope of work, project timelines, and estimated costs, showing good faith from the parties involved.

This distinct purpose of establishing the groundwork for upcoming formal agreements is what makes it different from other types of documents like proposals or notifications of delays, which serve other functions in the contractual process.