Letter of intent (LOI)
also known as LOI
A short document signalling that a client intends to proceed, often used to start work before the full contract is signed.
For example, a client wants the agency to begin urgently while legal finalises the MSA, so they sign a brief LOI confirming intent and agreeing to pay for work done in the meantime. It bridges the gap without leaving the agency exposed.
Why it matters to agencies: an LOI lets an agency start time-sensitive work without waiting on a long contract, while still creating a paper trail and some protection. It is not a full contract, so it should make clear what is binding - especially payment for any work done - to avoid working on a handshake.
- Treating an LOI as a binding contract, or assuming it never is.
- Starting real work on an LOI with no signed agreement.
- Leaving key terms vague, which fuels disputes later.
What is a letter of intent (LOI)?
A short document signalling that a client intends to proceed, often used to start work before the full contract is signed.
What is a letter of intent used for?
To signal a client's intent to proceed and, often, to authorise starting work before the full contract is finalised.
Is a letter of intent legally binding?
Usually only partly - some clauses, like payment for work done and confidentiality, can be binding while the overall deal is not. Spell out which.
What is the difference between an LOI and a contract?
An LOI signals intent and bridges a gap; the contract - the MSA and SOW - is the full, binding agreement that governs the work.