Construction projects involve a variety of technical and practical elements ranging from development of design, access to site through to selection of materials etc. Parties frequently spend their time pre-commencement focused on ensuring that these aspects of the project are agreed. However, there is likely to be pressure to commence work as soon as possible. Therefore, it is not unusual for parties to still be negotiating the contract when they need to start to procure materials, commence site preparations or even the works.

 

Thus parties may turn to a letter of intent. This can provide flexibility, allowing the contractual agreement to be worked out separately, while facilitating the commencement of preparatory work. However, a common problem with letters of intent, which are often hastily agreed, is that it is difficult to work out exactly what either party's actual liability is – especially in terms of payment. In this talk, Rachael Guan will run through some of the common pitfalls with letters of intent, illustrated with examples from actual cases. She will also provide a useful checklist of issues to include in future letters of intent.