Glossary

Letter of intent

A letter of intent is a short document that records the commercial points two sides expect to put into a later contract. In England and Wales it is not itself a contract unless the parties intend to be bound. Most letters of intent are marked subject to contract so talks can continue without creating a deal by accident.

Last updated 28 October 2026

Freelancers and agencies meet letters of intent when a client wants to lock a start date, a fee band or exclusivity before the statement of work is ready. Write what is binding (confidentiality, a hold on dates, a deposit) and what is not (the full scope, the liability cap, ownership). Put governing law of England and Wales on the page if the later contract will use it — see /law/england-and-wales.

On Contracts.io we treat an LOI the same way we treat the later deal: both sides edit one shared draft, then e-sign a frozen version. That is how you stop an inbox of “LOI_v3_final” Word files sitting next to a different signed contract. Lex drafts from one sentence; the other side never pays and does not need an account.

When is a letter of intent legally binding?

It is binding only where the parties intend to create legal relations and consideration is present. “Subject to contract” is strong evidence they do not. RTS Flexible Systems [2010] UKSC 14 shows later conduct can still overtake that label if both sides perform as if bound.

How is a letter of intent different from a contract?

A contract is the deal. A letter of intent is a map of the deal you still mean to write. It can sit beside a mutual NDA while you negotiate. If a deposit, date-hold or confidentiality must bite now, write it as a binding clause and keep the rest subject to contract.

What should a letter of intent include?

Name the parties, the job in one paragraph, the fee or fee range, the intended timetable, what is binding today, and that the rest is subject to contract. Add how long the letter lasts and which law applies. If a later master services agreement is planned, say so, so nobody treats the LOI as the standing terms.

How do we keep an LOI from becoming the deal by accident?

Mark it subject to contract, list the documents that will replace it, and do not start the paid work until those documents are signed. If work has to start, sign a short services agreement or freelancer agreement covering that slice. Do not perform a full project on an LOI and hope the paper catches up.

A worked example

A studio and a retailer agree a two-page letter of intent: spring campaign, fee band £18,000–£22,000, shoot week of 4 May, England and Wales law. Confidentiality and a £4,000 date-hold are binding. Scope, IP and the cap are subject to contract. They sign the letter on one shared link, then replace it a week later with a services agreement and a statement of work.

How it shows up in a contract

Sample wording · our own drafting

This letter is subject to contract, except for clauses [Confidentiality], [Date hold] and [Governing law], which are binding from the date of signature. It does not create an obligation to enter the proposed agreement. It expires on [date] unless the parties sign the Services Agreement before then.

In Plain English

This letter is not the contract, except for the secrecy line, the date-hold and the governing-law line, which bite now. Nobody has to sign the later agreement. If that agreement is not signed by the named date, this letter ends.

Common mistakes

  • Starting the whole job on a letter of intent and never signing the contract that was supposed to follow.
  • Leaving “subject to contract” off, then arguing about whether the fee band was a promise.
  • Using an LOI as a substitute for a deposit or a kill fee without writing those sums as binding.
  • Emailing numbered Word drafts of the LOI instead of agreeing one shared version.

Frequently asked questions

What is a letter of intent?

A short document that records the commercial points two sides expect to put into a later contract. It is binding only where the parties intend that, and only for the lines they say are binding.

Is a letter of intent legally binding in England and Wales?

Only if the parties intend to create legal relations and the usual ingredients of a contract are present. “Subject to contract” is the usual signal that they do not. RTS Flexible Systems [2010] UKSC 14 shows later conduct can still overtake that label.

How is an LOI different from heads of terms?

It is not, in law. Heads of terms is the usual UK label for the same shape. See /glossary/heads-of-terms.

Should we start work on a letter of intent?

Only the slice you have made binding. For paid work, sign a /templates/services-agreement or /templates/freelancer-agreement covering that slice rather than performing a full project on an outline.

What should we mark as binding on day one?

Confidentiality, a date-hold or deposit if you need one, and governing law. Leave scope, IP and the liability cap for the later contract unless you mean those to bite early.

Related

The legal wording governsLast reviewed 28 October 2026Pending lawyer review