03 Letters of Intent

Question 1

What are letters of intent?

Answer 1

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Question 2

Is a letter of intent an appropriate substitute for a contract?

Answer 2

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Question 3

What are the dangers of using a letter of intent to start a project?

Answer 3

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Question 4

What is the meaning of the term ‘quantum meruit’ in relation to letters of intent?

Answer 4

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Question 5

Your client has asked you to issue a letter of intent on his behalf. What would you do?

Answer 5

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Question 6

Would you draft a letter of intent on behalf of your client?

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Question 7

Who should draft a letter of intent?

Answer 7

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Question 8

What types of letters of intent are there?

Answer 8

1. Comfort Letters
2. Instructions to Proceed with Consent to Spend
3. Letters Recognising the Existence of Binding Contracts

Question 9

When might your client use a comfort letter?

Answer 9

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Question 10

When might your client use a permission to expend monies letter?

Answer 10

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Question 11

When might your client use a letter recognising the existence of a binding contract?

Answer 11

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Question 12

Once your client has issued a letter of intent, does the contractor have to do anything if it is to be binding on the parties?

Answer 12

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Question 13

What information might you have to provide for your client?s solicitor for inclusion in a letter of intent?

Answer 13

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Question 14

What caps or limits are usually included in letters of intent?

Answer 14

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Question 15

What happens when the limit of a letter of intent has been reached in terms of money or time?

Answer 15

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Question 16

Can a contractor apply for more money under a letter of intent?

Answer 16

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Question 17

If you were asked to review a letter of intent for a client, how would you respond and why?

Answer 17

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Question 18

Explain how a letter of intent has been used at the start of one of your projects.

Answer 18

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Question 19

Your client says he wants to use a letter of intent to form a binding contract on his project. What advice would you give him?

Answer 19

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Question 20

Your client wants to know how much information about the project he can put in a comfort letter without making it binding. What advice would you give him?

Answer 20

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Question 21

Your client wishes to commence its construction project on site immediately and considers that preparing a letter of intent is the only way that it could achieve this. What advice would you give him?

Answer 21

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Question 22

A contract has been started with a full letter of intent. Is this a contract under the Construction Act?

Answer 22

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