header-logo header-logo

02 April 2009 / Jenny Pattison
Issue: 7363 / Categories: Features , Procedure & practice , Terms&conditions , Property
printer mail-detail

Proceed with caution!

Jenny Pattison on letters of intent in the construction industry

Where a project needs to proceed without delay, letters of intent can form a useful temporary solution permitting a contractor to start the preparatory and/or main works, pre-order materials and instruct sub-contractors/suppliers before the formal building contract has been concluded. The recent case of Diamond Build Limited v Clapham Park Homes [2008] EWHC 1439, [2008] All ER (D) 353 (Jun) provides a timely reminder to proceed with caution in agreeing the terms of such a letter, to monitor the progress of the instructed works, and most crucially, to agree and execute the formal building contract at the earliest opportunity.

Types of letter of intent

A letter of intent requires a contractor to commence work pending formalisation of the building contract. The court in British Steel Corporation v Cleveland Bridge and Engineering Company [1981], [1984] 1 All ER 504 outlined three possible categories:

  •   
    ●     a “letter of comfort” expressing an intention to enter into a formal building contract in the future;
  •   
If you are not a subscriber, subscribe now to read this content
If you are already a subscriber sign in
...or Register for two weeks' free access to subscriber content

MOVERS & SHAKERS

Gibson Dunn—Richard Surtees

Gibson Dunn—Richard Surtees

Gibson Dunn adds employee benefits and executive compensation practice in London with partner Richard Surtees

Laytons ETL—Alec Cameron

Laytons ETL—Alec Cameron

Laytons ETL appoints new partner and head of intellectual property disputes

Muckle LLP—Roland Fairlamb

Muckle LLP—Roland Fairlamb

Specialist associate solicitor rejoins Muckle’s leading employment team

NEWS
A series of recent decisions has clarified important principles across property law, from perpetuities to lease renewals and public rights over land
Employers cannot rely on wellbeing services alone to defend workplace stress claims after a High Court decision awarding almost £1m to an overworked employee
Andy Burnham's brand of 'Manchesterism' could offer fresh thinking on legal aid and access to justice if it reaches Westminster, according to Roger Smith, NLJ columnist and former director of JUSTICE
The constitutional fallout from a change of prime minister, rather than the politics, is under scrutiny as questions arise over the limits of executive authority in a leadership transition
The legal profession is undergoing a fundamental shift from selling services to creating technology-enabled products, according to Professor Luke Mason, Head of School of Law at Regent's University London
back-to-top-scroll