I've gone past the letter of intent's cap
The letter capped what we could spend, the job carried on, and now they say the cap is all we get.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
What's happening?
The cap in a letter of intent is easy to pass. Nobody on site knows the figure. Your main contractor keeps issuing instructions, and the subcontract meant to replace the letter is still being negotiated. By the time anyone checks, the work done is worth well over the cap.
Then it points at the cap and says that is all you are owed. Whether it is right depends first on the letter's wording. It also turns on whether the cap was later raised or replaced by a fuller agreement. And it turns on what was said and done as the work went on. Those are questions for your solicitor, not for a site argument. But let the cap stand unchallenged and it becomes the price of everything you built.
What does not depend on the legal answer is the value of the work: what was built, what it cost and what has been paid. You can measure and prove that now, while the records and the people are still there.
The solution
Measure the work from the site records and value it. Use the quoted or agreed rates where they reach, and rates built from your actual costs where they do not. Reconcile the total against every payment, and keep the work inside the cap separate from the work beyond it. Then gather every document that shows the cap being raised, waived or replaced: later instructions, emails about the subcontract and payments above it.
Your solicitor decides what those documents mean in law, and the valuation gives that argument its figure. Our Letter of Intent Claim service measures and values the work beyond the cap, and pursues payment in your name. Letter of Intent Loss Prevention then sets the rules that watch the next cap.
Example
Illustrative example. The scenario and figures are invented.
The facts
A drylining subcontractor starts a £420,000 package on a letter of intent capped at £60,000, and the subcontract is never signed. After 7 months it has been paid £180,000, and the main contractor says only the cap was ever authorised.
What happens
- The subcontractor measures the work from the site records and the drawings it built from. It values the work the quote priced at the quote's rates.
- A revised drawing added a staircase enclosure with no quoted rate. The subcontractor values it from its labour and material costs, and checks that against its rates for similar work.
- It reconciles every payment: the main contractor has paid £180,000 over five payments, three times the cap.
- It sends its solicitor the valuation, with the instructions issued after the cap was passed and the emails about the unsigned subcontract.
- It sends the valuation of £310,000 to the main contractor, with the full build-up.
The claim in figures
| Item | Amount |
|---|---|
| Cap in the letter | £60,000 |
| Value of the work | £310,000 |
| Paid | £180,000 |
| Balance claimed | £130,000 |
| Balance settled | £105,000 |
The outcome
The main contractor's own payments, three times the cap, undercut its position. The account settles with a further £105,000. The Handover Pack prices the £25,000 given up on the staircase, where the records were thinnest.