The Subcontractor Letter of Intent is a critical preliminary document used in Canadian business practice when a main contractor intends to engage a subcontractor but requires an interim arrangement before finalizing a formal agreement. This document typically emerges during project planning phases when detailed terms are still being negotiated but parties need to establish basic understanding and potentially commence preliminary work. It includes essential elements such as project scope, proposed commercial terms, timeline, and any immediately binding provisions. While governed by provincial contract law and construction legislation, the LOI serves as a strategic tool to secure subcontractor commitment while maintaining flexibility for final contract negotiations. It's particularly valuable in time-sensitive projects where work needs to begin before full contract documentation can be completed.
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1. Date and Parties: Identification of the contractor and subcontractor with full legal names and addresses
2. Project Information: Details of the project including location, scope, and primary contractor/owner information
3. Scope of Work: Clear description of the intended services or work to be performed by the subcontractor
4. Proposed Commercial Terms: Outline of the anticipated pricing, payment terms, and commercial structure
5. Timeline: Expected project schedule, start date, and duration
6. Binding Terms: Explicit statement of which provisions are intended to be legally binding
7. Conditions Precedent: Conditions that must be met before proceeding with the formal agreement
8. Exclusivity Period: Duration during which parties agree to negotiate exclusively with each other
9. Next Steps: Process and timeline for moving forward to a formal agreement
1. Preliminary Works: Used when immediate work needs to begin before the formal agreement is signed
2. Confidentiality: Include when sensitive information will be shared during the negotiation period
3. Break Fee: Include when parties want to specify compensation if negotiations fail for specific reasons
4. Insurance Requirements: Used when preliminary work will commence before the formal agreement
5. Termination Rights: Include when the LOI period is lengthy or significant resources are being committed
6. Dispute Resolution: Include when binding provisions could lead to disputes during the LOI period
1. Preliminary Scope of Work: Detailed description of the proposed works or services
2. Price Schedule: Preliminary breakdown of costs, rates, and payment structure
3. Project Timeline: Proposed project schedule and key milestones
4. Required Documentation: List of documents needed for formal agreement (licenses, insurance certificates, etc.)
Relevant legal definitions
Clauses
Relevant Industries
Construction
Engineering
Infrastructure Development
Real Estate Development
Mining
Oil & Gas
Renewable Energy
Industrial Manufacturing
Telecommunications
Transportation
Relevant Teams
Legal
Operations
Procurement
Project Management
Commercial
Risk & Compliance
Construction Management
Contract Administration
Business Development
Finance
Relevant Roles
Project Manager
Construction Manager
Contract Administrator
Procurement Manager
Legal Counsel
Commercial Manager
Operations Director
Site Supervisor
Cost Controller
Risk Manager
Business Development Manager
Estimator
Chief Operating Officer
Project Coordinator
Quantity Surveyor
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