Letter of Intent (LOI)

A Letter of Intent (LOI) is a preliminary agreement between two or more parties that expresses their intention to enter into a formal contract for a specific project or transaction. In construction, an LOI may be used to outline the key terms and conditions of a proposed project, such as the scope of work, timeline, budget, and payment terms, pending the negotiation and execution of a final contract. The letter typically includes a description of the project, the parties’ roles and responsibilities, the contingencies and assumptions, and the process for finalizing the contract. The purpose of an LOI is to provide a clear and concise record of the parties’ understanding and commitment to the project, facilitate the planning and preparation for the work, and reduce the risk of misunderstandings or disputes. While an LOI is not legally binding, it can create moral and reputational obligations and serve as a useful tool for guiding the parties’ actions and expectations.