The Subcontractor Letter of Intent (LOI) is a crucial document in U.S. construction and development projects, typically used when there is a need to establish preliminary terms with a subcontractor while the main subcontract is being finalized. It serves multiple purposes: documenting the intent to enter into a formal subcontract, establishing key commercial terms, and potentially allowing work to commence before final contract execution. The LOI can be particularly important in time-sensitive projects or when long-lead items need to be ordered. Under U.S. jurisdiction, these documents must be carefully drafted to clearly delineate binding and non-binding provisions, as courts may interpret ambiguous LOIs as creating unintended contractual obligations. The document typically includes essential terms such as scope, price, timeline, and conditions precedent, while leaving more detailed terms for the final subcontract agreement.
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1. Date and Parties: Opening of letter identifying the sender, recipient, and date
2. Project Reference: Clear identification of the project, including location and main contractor details
3. Scope of Work: Brief but clear description of the subcontractor's intended scope of works
4. Commercial Terms: Key financial terms including proposed contract value, payment terms, and any advance payments
5. Programme: Expected start date, duration, and key milestone dates
6. Conditions Precedent: Conditions that must be met before proceeding with full subcontract (e.g., main contract award, licenses)
7. Validity Period: Duration for which the LOI remains valid
8. Binding Elements: Clear statement of which elements of the LOI are intended to be legally binding
1. Interim Working Arrangements: Include when work needs to commence before full subcontract execution
2. Insurance Requirements: Include when specific insurance coverage needs to be confirmed early
3. Confidentiality: Include when sensitive information will be shared during the pre-contract phase
4. Exclusions: Include when certain items need to be explicitly excluded from the scope
5. Design Responsibilities: Include when the subcontractor will have design obligations
6. Parent Company Guarantee: Include when financial backing needs to be confirmed early
7. Termination Provisions: Include when specific termination rights need to be established during the LOI period
1. Preliminary Scope of Works: Detailed breakdown of the proposed works
2. Preliminary Programme: Initial project timeline showing key dates and milestones
3. Price Breakdown: Detailed breakdown of the proposed contract sum
4. Key Personnel: List of key team members and their roles
5. Required Insurances: Details of insurance types and coverage levels required
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Relevant legal definitions
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Relevant Industries
Construction
Infrastructure
Real Estate Development
Engineering
Industrial Projects
Commercial Development
Residential Development
Energy
Transportation
Telecommunications
Relevant Teams
Legal
Commercial
Operations
Procurement
Project Management
Construction
Contracts Administration
Risk Management
Finance
Estimating
Relevant Roles
Project Manager
Commercial Manager
Contract Manager
Procurement Manager
Construction Manager
Quantity Surveyor
Legal Counsel
Chief Operating Officer
Operations Director
Commercial Director
Procurement Director
Subcontract Administrator
Project Director
Site Manager
Estimating Manager
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