Letters of intent have been, and still are, a common occurrence in the construction industry as a mechanism by which to initiate works prior to the signing of a formal contract document. Although the forms and wording of letters of intent are numerous and varied, they all essentially indicate one party’s intention to award a contract to another party at some time in the future. Lake and Draetta1 define a letter of intent as “ … a precontractual written instrument that reflects preliminary agreements or understandings of one or more parties to a future contract”. For example, typical wording used may state:

An employer in the construction industry typically procures works on the basis of a competitive tendering system. This involves an invitation to tender being issued by the employer to a short list of contractors who subsequently submit their tenders to the employer by a specified deadline. The employer’s invitation to tender will usually make reference to a proposed set of contractual documents, including plans, specifications, contractual terms (often by reference to an industry standard form) and, sometimes, bills of quantities to which the employer wishes the successful contractor to be bound upon the award of the contract.