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The main aspect that needs to be understood is that an LOI is not a contract; at best it is an offer that needs to be confirmed or negated by the other party. However, a particular contractor by dint of some merit has been chosen over others. “ It applies also where the sub-contractor has been chosen for his specialist trade. – “British Waggon Co.-v-Lea (1880)” 2
(Footnote: In this case it was held that delegation of contractual duties is possible except when individual’s skill, competencies and other resources are not considered while effecting the delegation.)
This was again confirmed in the case of “Southway Group Ltd-v-Wolff and Wolff (1991)” 3 (footnote: Novation is another means by which contractual obligations can be "transferred" from one person to another)
That being said, it is also necessary to state that in construction business, the main documents are the floatation of tender. As per accepted protocol, the contractor or owner floats tenders which are quoted by different parties, these tenders are examined and the final bid is finalized.
“The form and content of LOIs are as varied as the circumstances in which they may be issued.No doubt it is this variety that led Robert Goff J in British Steel Corp v Cleveland Bridge and Engineering Co Ltd (1984) to observe that there is "no hard and fast answer to the question whether a letter of intent will give rise to a binding agreement: everything must depend on the circumstances of the particular case." 4
Sometimes there is an oral promise by one party to do something and for another to remunerate him on his doing it. “ The latter transaction is really no more than a standing offer which, if acted upon before it lapses or is lawfully withdrawn, will result in a binding contract.” 5
However, in this case, although the parties wished and hoped for the contract to be finalized, it did ...Show more


1) In simple terms, an LOI could be said to be a written statement manifesting the desire of its signatories to enter into a structured accord, especially with regard to the business dealings and its execution. Sometimes, there may be no formal basis for contract. “A formal…
Author : acremin
Advanced Construction Law
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