Construction Contract Acceptance Letter: Fill & Download for Free

NO,Letter of Intent (LOI) is not enforceable in the court of law in the event of eventuality.When it comes to construction contracts, LETTER OF ACCEPTANCE / WORK ORDER is enforceable in the court of law.To explain it in simple terms,Let’s say you quoted for a construction project. The employer/client has verified your bid and sent you a LETTER OF INTENT.Based on this letter, you start the works and claim the payment from the client.The employer/client has the right to reject the claim because you don’t have a legally valid document (Letter of Acceptance / Work Order).LOI just shows the willingness of the employer. It is not a legally binding document.Feel free to comment below if you have any query.

Let’s take an example.In a standard construction contract, it’s unlikely that you will be paid up front for anything. Usually, you get “progress payments” - so much when you complete a third of the job, a little more for another third, and the rest when the job is substantially complete.However, on a large project, there will be only one contract with a “prime contractor” or “general contractor” who has to finish the whole shebang. They will do some of the work themselves, but they will hire a structural contractor, mechanical contractor, and an electrical contractor do to these phases of the work. Those contractors will also hire sub-contractors to perform specific phases. For example, the mechanical contractor will hire Heating/Ventilating contractors to install heaters, air conditioners and ducts, plumbing contractors, and insulation contractors. They may also hire their own sub trades.So let’s call our project the “Dump Casino”. Mr. Dump hires an architect to design the casino, to tender out the construction package and to administer all the other contracts. Mr. Dump’s company, “The Dump Group” only has a contract with the architect and the prime contractor. The sub-contractors have a contract with the prime contractor. The other trades have contracts with the sub-contractors.All is well and good. Let’s say the project goes fairly smoothly. But let’s also say that Mr. Dump is as crooked as a dog’s hind leg. So, now with all the contracts signed, how does he muscle everyone into accepting a fraction of what they’re owed.Mr. Dump starts asking for more than what’s in the contract. Let’s call these “frills”, such as a nicer finish for the walls (mahogany instead of pine). All the signatories to these lucrative contracts are now frantically working on these “extras”.In any normal construction contract, there will be other extras.The contract calls for a strict process for adding extras, either the ones requested by the owner or ones needed by the contractors. Mr. Dump is slow to sign off on the necessary paperwork, but assures the architect and prime contractor that they should just continue the work.These extras start to pile up and the paperwork isn’t done. All of a sudden, Mr. Dump starts complaining about the costs of these extras. Now he starts asking for “cost savings”. This is normal in any construction project once costs start to escalate. The contractors suggest some possibilities, but these require change orders too and, as usual, Mr. Dump is slow to sign off.The contractors are still working hard but are now starting to get worried about paying for the extras. They contact their lawyers who tell them that maybe they should stop until the paperwork is signed. The contractors pass this information to the architect.Now the architect starts to get worried. On a project of this size, time is everything and critical paths have to be completed in order to get work done on time. Contractors who are delayed by the delays caused by other contractors might claim compensation. The architect tells this to Mr. Dump.Mr. Dump is, of course, furious that the contractors don’t trust him. He reminds them that the contract also contains clauses that hold the contractors responsible for delays on the project that cost him money. He threatens to sue any contractor who walks off the job.Finally, some of the work reaches the first payment date. The architect signs off on the payment to the prime contractor, but to no-one’s surprise, payment is not forthcoming. Mr. Dump is upset about the quality of some of the work and demands a discount.The prime contractor, subs and trades really start getting worried. Their lawyers really get involved and threaten to lien the building.But Mr. Dump’s lawyers are ready for them. They INVITE the lien claim and say they will counterclaim for poor workmanship. Until the matter is settled, they won’t pay. Meanwhile, the project keeps moving forward and no-one is getting paid. The project is heavily leveraged and a half-finished building won’t cover the construction costs to date. At this point, the payments to the subs and trades are really out of the control of the architect and prime contractor, who aren’t getting paid either.Finally, Mr. Dump generously offers the lien holders 50% of the money owed to them. Settlement documents are signed.Except Mr. Dump doesn’t pay. More angry letters. Eventually, he offers about a third of the original amount on a “take it or leave it” basis. The contractors, facing massive legal bills and still having their own bills to pay, take the money.

In construction contracts, the actual contract is often ‘compiled’ out of several documents.. eg..ContactThis contract incorporates the following documents -The Letter of AcceptanceThe BidThe Particular Conditions of ContractThe General Conditions of ContractThe SpecificationsThe Pricing SchedulesSigned …The main commercial contract terms are contained in the General Conditions of Contract - this is often a template or ‘broiler plate’In order to create a specific instance of the template all amendments, additions, initialisation of variables etc to the General conditions are brought about in another document(s) eg the Particular Conditions of Contract or some other or similar document(s) (eg it could be called Special Conditions or Specific Conditions, or even Contract Data or the Schedule)In most cases the General Conditions will define the meaning (and use) of the Particular conditions of contract and other component documents.RegardsGavin Weiman