How Can You Accept a Letter of Intent?

A letter of intent - whatever its form, content, length or complexity – is an offer to pay a contractor to carry out some preparatory works, order long-lead goods or provide initial services. In contract terms, the client’s offer has to be accepted by the contractor to form the basis of a contract.

What is Acceptance?

Acceptance is an act which unequivocally responds positively to an offer. Think of it as a ‘hell yes’ rather than a tentative ‘yes…but’. Generally, English law does not require acceptance in any particular form, but many letters of intent contain a paragraph like this:

• Please sign and return this letter. The countersigned letter will form a provisional contract.
• A signed copy of this letter must be returned before work commences on site.
• Kindly acknowledge your acceptance of this letter and your agreement to proceed in accordance with its terms by signing and returning two copies of this letter to us.

Most of these examples assume that the contractor will sign and return a copy of the letter of intent to the sender. Not all contractors do sign and return it .

The real question is: do they actually need to? And if not, why bother writing all that stuff in your letter of intent?

What Should Happen

The letter of intent is often sent on a Friday afternoon for works to start on the following Monday. Any contractor with a good contract process will need to carry out these steps before accepting it:

• Check the scope of works in the letter of intent
• Check it’s not being stitched up with any details that ‘it has agreed’ in relation to the main contract
• Check it has the ready labour, plant and equipment to start the works when requested.

Before leaving the office for the weekend, the contractor will also need decide its strategy on the legal terms. It can either (1) risk missing a terrible legal clause and accept the letter as drafted, or (2) negotiate the terms of the letter and risk missing the deadline to start the project. It's caught between a rock and a hard place!

If the contractor is in any doubt, it may start work but it won’t sign your letter.

What Happens in Practice

Whatever your letter of intent says, any conduct can accept the offer in the letter of intent: a handshake, a telephone call, a text, an email, or starting work on the site as instructed.

If the letter of intent is varied or extended then simply by continuing with the works and not responding, the contractor accepts the new terms. This is what happened in ERDC Group Limited v Brunel University [2006] EWHC 687 (TCC). When the final two letters of intent were sent, the contractor accepted them when it just carried on with the works ‘without demur’.

My Top Tip on Acceptance

Be kind to yourself and make your letters of intent clear and practical. Remove the need to return a signed copy. After all, your real focus should be on getting the main contract signed not the letter of intent.

If you want help deciding if your letter of intent is a contract, see my blog.