Legal risks of commencing work under a letter of intentPremiumA letter of intent can authorise an early start, but it may leave the parties without agreement on scope, price, programme, liability or the terms governing completed work. The legal...

Letter of intent expenditure capsFreeA contractor that continues after reaching a stated cap may perform additional work without acquiring a right to payment for the excess.

Payment for work without a formal contractFreeThe payment basis depends first on the letter itself and then on the objective basis on which the parties requested and performed the work.

When a letter of intent forms a binding contractPremiumA letter of intent may create no contract, a limited interim contract or the substantive bargain. Its legal effect depends on the words and conduct viewed as a whole.

Advantages and disadvantages of letters of intentPremiumAn interim letter can preserve a programme date, but it may leave scope, payment, liability and exit rights unresolved while expenditure increases.

Professional negligence and letters of intentPremiumRecommending an interim letter is not negligent by itself. Liability depends on the circumstances, the advice given and whether the arrangement exposes the employer to avoidable risk.