What is a letter of intent in construction?

A letter of intent in construction serves as a preliminary document that expresses one party's intention to enter into a binding contract with another party. This letter is often utilized to outline the terms and conditions that the parties expect to include in their future formal agreement. It acts as a significant step in the negotiation process, signaling commitment and establishing a framework for the upcoming contract discussions.

The letter of intent does not finalize any contractual obligations but rather indicates that both parties are moving forward in good faith with the expectation that a formal contract will be executed shortly. This is particularly useful in construction, where preliminary agreements may be necessary to commence work or secure resources before the final contract is drafted and signed.

The other options suggest different functions that do not accurately reflect the purpose of a letter of intent. For example, it is not typically used as a request for project extensions or as a summary of job site rules, nor does it imply a commitment to finalize a project plan. Instead, it sets the stage for further negotiations and the eventual development of a formal agreement.