Letter of intent: definition and example
A letter asking you to start work before the subcontract is signed, often with a cap on what you will be paid.
By Jack Butler-Kettle · Updated
Guidance for England and Wales. Check the contract, amendments and facts that apply to your job.
What it means in practice
A letter of intent can authorise limited work while a fuller agreement is being negotiated. Whether it creates a contract, and on what terms, depends on its wording and the surrounding facts. Scope, spending caps, expiry, payment and what happens if negotiations fail need particular attention.
Track the authority actually given as work progresses. Letter of intent loss prevention helps identify gaps before work exceeds the agreed limits.
Worked example
The facts
A specialist is authorised to procure materials up to £10,000 before a subcontract is settled.
What happens
It records orders placed against the cap and checks whether installation is included.
Before exceeding the authority, it seeks a clear written agreement for the additional work.
What this shows
Starting a package does not establish an unlimited commitment to pay for all later work.