How Do I Sign New Jersey Banking Letter Of Intent

How do i industry sign banking new jersey letter of intent

welcome hi um it's the to sarahs we're looking at letters of intent and construction contracts this morning um so I'm Sarah Fox I run a company called 500 words I used to be a construction lawyer as but 20 years looking at construction contracts so understand them in fairly good detail say Sarah do you want to introduce yourself oh hi everyone I'm Sarah shooter I run a company called shooter consulting limited i'm also a construction industry lawyer I've been around for longer than I care to remember but pretty much around the back same time as Sarah so I also have a pretty good handle on industry contracts I work directly in the industry nowadays so I'm very close to what people are actually doing day-to-day fab so probably the best thing to do is to start off by explaining what is a letter of intent so that we actually understand what we're talking about so in the UK construction industry letter of intent is a short form letter sent to the parties to get the contract moving it's not a letter of intent in the sense of sent to a student going to an American college to study it's not that sort of letter intent it's just a really quick easy way to start a construction project right now it tends to be about somewhere four pages long not very well drafted but that's what we call a letter and 10 so Sarah do you want to explain what you mean by and no contract yeah this is that this is a bit more of a tricky on actually what is no contract well it's quite difficult to say because it's all the things that a contract is not it is not all the bits that a contract needs to have in order to be a legally binding contract so it's a it's an arrangement of some sort which doesn't have clear offer and acceptance which are the two key bits that we needed in UK law it doesn't have a proper consideration by which we mean the exchange of money services and works going between the two parties or multi parties and it doesn't have a proper intention to be a legally binding contract so all of those things that we need one or more of those will be lacking generally speaking when we're talking about no contract what we mean is when the contractor actually starts work but doesn't seem to have a paper trail that he thinks is a contract now it could be that actually what they've got is a letter from the employer saying or can you start now the contract has been allowed on site so actually the employer has already said yes we will get round to doing a contract but we haven't got around to it yet so there is some correspondence couple of telephone calls often emails now but not what anyone actually thinks of as a contract and the difficulty is it's all those instructions might result in the contractor getting on the site and doing works but it doesn't result in the contractor having any idea what they were actually allowed to do when they're meant to start when they're meant to stop and how much they're going to get paid so something it could be an offer letter so it could be a letter saying we've received your tender you're the best price we will enter into a contract with you but it hasn't got there yet so it can be an offer letter it could be a letter of acceptance it can be a letter of comfort lots of different things might be no contract and it depends and the problem is because you need the detail because you don't know whether or not it's a contract it means that both the contract when the employer have no idea what they're really bound to do what they have to do what they can choose to do how much is going to get paid so that's what we mean by no contract offered what a lawyer means by no contract and what a client means my no contract has two different things the client just wants to get on with the job Sarah don't welcome time kinda don't have a contract everyone just wants to get on with the job that's the whole problem the pole problem is the construction industry is not very good with paperwork but is really good with getting on the job so no contract could be when nothing has been sent off a letter exceptions less a letter in 10 it could be when just there's some emails there's some pre meetings but it could just it could be when there's a series a bit to paper which could be a contract if any ever sat down and looked at them and we're in the right way yeah bits that are needed so what I problem with not having a proper contact sarah well the problem is that both parties don't really know the arrangement that they have they think they have an idea of it so the contact is going on site and the employer is paying some money but really they haven't button down the detail of who's going to do what when it has to happen what the pressures are what the milestones are are there any gateways that have to be gone through so they really need to know all of that before they can be certain as to what the scope of the work is and what the terms of the work are the start the finish and everything else strike and it risks in that your client Luke attractors yeah and the severn says if you don't have a contract you can leave site you are not bound to complete any works you're not bound if you have no contract to complete them to any particular standard all within any particular time period or for any particular costs and frankly if the employer marks you're bad you can leave the site the real problem is that nobody actually knows whether in fact they can leave the site so although some contractors do most of them stay and they're going to get paid a decent amount of money they do and they and their hope that by getting on with it that will engender some kind of benefit both in kind and in actuality from the employer and therefore the contract will follow and everybody will be happy and and you know it's it's a case of we'll just get this bit of paper out the way and then everything will be fine that's not really the point and getting the bit of paper out the way it's just the starting point from my perspective yeah so the real problem that we have is that no contract is a really unattractive option for both parties because the goodwill that we think might exist doesn't necessarily exist in practice but I utter intenta a letter of intent is actually not much better because the way letters are in turn are drafted in the UK you don't have a clear scope of works you don't have a clear ice you don't have a clear time scale and in fact all you've got is somebody saying if you do some works and we never get around to the proper contract we might pay you reasonable costs but that's about it so letters of intent as wave they're drafted actually are not much better than no contract many of them include a right to terminate and check the contractor off the job pretty much it will yeah I think in some ways the pot is a better off having no contract because although you've got all the uncertainty of those things the costs outcome could be more beneficial for the contractor yes so the truth is if the contractor is on your site carrying out works whether or not you've got a letter of intent you're going to have to pay for them you're going to have to pay for those works because you're going to get the benefit of them and even if you don't have a contract in English law you're going to have to pay for them well and in English law if you don't have a contract the contract they might be better off because absolutely because of the way that the costs will be calculated and judged by whatever the competent authority is by the court or the tribunal yes lots of contractors know that they're better off either with no contract or with a really woolly one because they know that they're just going to let whatever tender price that they included was on the basis of you know buying the work slightly or a lesser profit but actually by the time they get to erm at no contract or they've gone beyond the works in the letter intent they're just going to get reasonable sum which could be more than I tended for absolutely and and that's why we have this big challenge don't we took to educate clients to take proper notice of their contracts until make sure that they spent time and invest time early in getting them sorted out or if they must do letter of intent to put in place a really good solid one with all the things in it that we're advising them to put in it at least they have a basic framework for which to break before they then spend time putting the contract together but this kind halfway house of having no contract to me is far too risky as an advisor but clients are deal with day-to-day can see certain advantages to it so it's persuading them of the merits of getting a letter of intent and play a proper letter of intent in place or why bother doing a letter of intent when you can spend time going straight to the proper contract that's the okay yeah love the bridge so so one of the things that you talked about was what a good letter of intent needed or her care for a proper letter and 10 the difficulty is most letters of intent I did some research on Twitter not the most scientific admittedly but thirty-five percent of people said they recycled letters of intent and the rest of them said they used a precedent now a precedent is just a posh word for a recycled latter intent but actually nobody nobody would have been able to say for sure that the document they used as their base document was a decent letter intent they don't know what a good letter intent look like so now they're recycling something which is rubbish so there are four things you really really have to have for a good letter intent you have to have clear parties so who's paying and who's doing the work that's not the hardest thing you need a clear scope of works now most letters of intent do not include is clear paper works they use words like preparatory works works of mobilization any Goods works or services needed to keep to the project schedule they don't have a price for those works most letters of intent merely say that if we don't get round to the proper contract will pay reasonable cost well reasonable cost that's us how long is a piece of string but it's no help to anyone you have no contract yeah the other thing that you will also need is time now if the whole purpose of a letter intent is to get the project moving and keep it to time the fact that maze letters of intent don't give a timescale for carrying out the first bit of worked doesn't help how can you keep a project on track if you don't have a timescale for the first chunk of work you do there is no obligation in most letters of intent for the contractor to finish by catan no they're more worried about the money that you find that Sarah in your experience yeah absolutely they'll get paid a fair price for the work that they've done and the employer wants to put a cap on it so that they don't spend too much too quickly too soon yeah and that having a contract a submarine says binds the parties together now if they wanted to work together for the project because they've done through the tender process they like their tender they like their experience all that kind of stuff they like their price why wouldn't you bind yourself properly to someone rather than just going I tell you what just come along and we'll just we'll sort it out later so what's a problem with having no contracts well the problem is the risk the problem is that the client doesn't really know where they stand the contractor doesn't really know where they stand and that's dangerous for everybody concerned what I'm interested in is really whether you can ever have an arrangement which is not a contract I mean clearly you can have some sort of arrangement of the sort we've discussed a bit already but the courts are going to strive if they are asked to find that a contract exists and they're going to look for all the things that are needed to try to put the bottles in the position where they are bound to each other absolutely one of the things we said earlier under tip one was the five things you need for a contractor offer acceptance consideration intention uncertain terms now consideration is anything of value it could be a you sweet wrap or a peppercorn so we don't need to worry about that parties we don't need to worry about the person who site there and the person doing the work that's fairly clear offer an acceptance well you've got a tender process you've already got offer an acceptance yeah intention is presumed where you've got two companies in tensioners presume so the only thing we need to work out is certain terms well we've said about what you need for a letter Internet content any parties works price and time but actually only two of those you absolutely need because if you don't have the price for the works all the time to complete the law will fill them in an English law will imply terms into your contract to fill in the gaps and once you've started that's what they want to do they want to fill in the gap they want to make a proper arrangement between you so even if you don't think you've got a contract the courts might disagree with you so a letter of intent can not be a contract when it's trying to be and no contract can be a contract when it's trying not to be because the courts don't care what you think they care what the law says that's it well that's right and the courts are now quite purposeful and purposive with how they're going about industry dealings should we put it in a broad sense and I wonder how helpful there is two to the industry in general we have this as I called it a sort of great big chasm between the between parties who want to do something together but don't want to take this rather scary step of entering into contract because they think it involves all sorts of things which actually it doesn't involve that they put forward some sort of together some sort of Willie letter of intent which I think's tides them over and gives them a bit of this and a bit of that but not really anything of the real stuff that they want um all we're jumping into full-scale several hundred volume contracts which are put together by the best lawyers in town so I'm quite interested in how we educate and how we talk to the the smaller organizations and entities who you need to understand why a contract is a good thing yes and I think as much as anything contacts have got a bit of a bad name for themselves yeah we know we know that loads of people do not read their contracts lots of consumers don't read their contracts you know there's been lots of different companies who've done T's and C's so apples cloud conditions apparently has a zombie clause getting station did one which was a Herod clause another company did one which was the devil closet you know took your immortal soul so lots of people don't read their terms and conditions and that's really clear so contracts of beginning to get a really bad name for themselves so you say would you like a contractor most people they kind of go well why why would I want a contract if I'm going to work with someone untrusted why don't you sit down well I yeah that's right and you understand that position when you think about how big contracts have become and how / lawyers they've become to some extent and what we really need to do is to try to strip back contracts into simple form but people can understand and use and read and administer themselves I mean there's so much in English law which is implied for you which can be relied upon I don't think it needs repeating I don't think it needs a adapting or or changing in any way let's just use the law that we already have it's balanced and it's fair and it works I've come hot and yet losses recently which have tried to change what is otherwise a fairly decent and fair position under law if I was very hard-headed law acting for one party I might push in a particular direction but actually when you're in industry and you're taking a more balanced you because you want to get the project underway and people need to get on with things then actually a big part of it is common sense absolutely so lately so one of the things one of the things that someone gotten for getting speaker feedback room ok but no something good feedback or do you mean because I think the great thing about contracts is that you can simplify them a lot y u're squeaking that's better yeah simplify simplify contact enjoy the content we don't really need very much do it to make it to make it binding and to make it work because the law is so extensive in a number of areas already at least in English or we don't have to use codification as you do in other jurisdictions in order to make it work and that's one of the big advantages but it's also one of the scary things because people don't really understand because of most of our Constitution is unwritten how it actually works and how it will important and impact on on on the situation yeah and I think you're right thank you like that we have a complex content I've worked with are you always felt until I got 17 edges by which time your mother just wanna grab your contract I may as well go straight into a contract and do the full-blown thing so what would we recommend we be better to people I I think probably from an industry perspective I would recommend and this this is always the case i would recommend spending some time upfront trying to work out exactly what the project is looking particularly that subject matter working out what the scope of the thing is and what the terms of it are that we want to bind people to and without those things without a proper strategy it strikes me that a lot of that time we'll catch up on people later upon and that's where i find in my work a lot of the disputes arise is that that lack of investment up front then causes problems later in the light lit later down the line absolutely and sleepy okay this process of tearing everything absent deciding a started early and then we we whip it all up all out of course and it's irrecoverable party to invest in in tendering can spend six very big a six-figure sum sums entender pretenders with a bloody nose you know that money back so so we're going to do that and let's do it properly so if we're going to use letters of intent what sort of letters of intent should clients be using well they should be using ones which are clear to start with clear and what they expect to be done for the money they expect to be done within the time they expect to be done it and without that there's no obligation to complete in a particular way or in a particular standard or to a particular time scale absolutely in lots of letters of intent and incredibly woolly they seem to refer far too much to the main contract what they would like to happen their future looking but they don't actually look at what's actually happening on the ground that's right and what do we want now at this point of time that we need to button down in a particular written way which is not the main contract the letter of intent I've seen recently have tried to pull into them all sorts of bits which you would find in a main contract really esoteric stuff yeah important stuff like um bribery and corruption but but nothing which is the immediate need right now for the parties you got to get on site with you Ricky on Monday yes I'll pay you something anti-corruption yes it's important but not any letter of intent absolutely and the real risk with the packing letter of intent with more and more more stuff is that people think it's like as good as the main contract absolutely but it's not and it's not meant to be it's meant it to be a thought fix isn't it so it should be neat and short and focus their attention on getting the proper contract in price that's the only thing that's actually going to help the parties that's right and if you're going to spend time doing that then get some focus on getting a short and sharp letter of intent getting it done and then concentrating on the main contract so we don't want no contract although no contact actually sometimes helps to focus a mind that they don't actually have a contract no and I've come across clients contracting clients who are very strategic in this way and who are actually choosing to not enter into a contract because they perceive rightly or wrongly that they're in a better position to not have a contract and that's partly about how the contract is imposed upon them how it's not balanced and it's not as fair as it should be in their eyes contracts have certainly been skewed I think they've been over lawyered I'm putting myself out of a job but I think they've been Overlord to a great extent oh yeah contractors are actually adopting very clever ways of not entering into contracts and that's another challenge for the industry as a whole yep it says maybe another challenge for another day I know that a lawyer in London has just posted on linkedin about at the / lawyer of the NEC contract ah and how we need to avoid overloading with these contracts I'm one of his suggestions is a really good one that lawyers should actually get involved much earlier in the project because actually if you get a lawyer involved way before you get to the letter intent stage they can shortcut the process and make sure you go straight to the main contract you don't have to go virus acutis root of this letter intent recycled garbage that you found on your computer from several years before I think to be fair all that is of intent I've ever seen our garbage haha well the ones that you've written though once I've written obviously put most of the ones I've seen because most people don't understand what they meant to do so you know it's it's a failure to understand what you need at this time to help your project absolutely and the fear that few of the words that you have the more problematic it is and actually I think my experience is that the more words you have the more complicated is the more problematic ative though keeping it simple including it sure is absolutely the kid whoever that guy was who posted the comment on linkedin I think he must have just read my latest article which talks about getting lawyers in Chile to the project early and the benefits of that and how actually a really good lawyer at an early stage food industry knowledgeable and all the rest of it can help not only to shortcut that process but to a bit to make it much more friendly to both of the parties much more usable you know after all these guys have got to go onto the site with a big contract in their back pocket and start doing stuff with it you know sticking loaded you know and you know letting it gather dust is really not the way forward but that is what happened so let's make contracts friendly so that people will pick them up and choose to read them and choose to use them absolutely and that applies as much the letter of intent of making it simple and short and easy to read as it does to the actual contractors following because if the contractor was following was easier to read and shorter it wouldn't take that long to negotiate it it would already be agreed you would not need letters of intent so actually simple contracts can help you avoid the whole debate about letters of intent or no contract the whole thing to watch your vote for letters of intent or no contract which is better from the image on the block time when the industry perspective I'd say no contract is better from the contractors yep and actually I think it's better for the employer because the employer once they said to letter of intent believes they actually have a contract and they don't necessarily know and they're possibly in a worse position than one thing nor the other yeah because if you can have an issue 17 letters of intent with their 10 million pounds worth of from liability limiting you might as well in that time I've got a proper contract in place and if you can't get a proper contracting place you need to learn to walk away good lessons so there it is don't have a letter in 10 you've put me job put me out of a job there we are it's all about risk isn't at the end of the day it's about fellas all about risk helping and the main routes where the letter of intent is you never sign the proper contract you know you've got a contract it doesn't matter how good it is you've got one tick you but you know you check list of you know heart has tix site screw you take tea making facilities take piece of paper tick yeah Moo then that's it it's deck so let's just go through some of the things that we've talked about on the string and just wrap them up so the first thing we talked about was what is a contract what is a letter of intent and for a contract you need an offer which he can be a tender and acceptance which can be any act it can be email it can be telephone it can be a handshake it can be letting them on to cite need something with value what we call consideration but that's pretty easy it can be a peppercorn even if you're going to throw it away so considerations not you need something called intention to create legal relations but between two companies you have that anyway and you need certain terms so you need enough for somebody else to know what they could and should be doing but certain terms is easy because actually what you need is parties works price and time there's the four things that you need in any construction contract so whether or not that's a letter in 10 which is two pages long or an NEC contract which is 20,000 words or a JCT which is 50,000 words those are the only four things you really need to focus on but the problem is the most of the letters of intent are very clear about the works that need to be done the price it's going to be paid for those works and how they're going to keep the project to schedule which is the whole reason we use a letter in turn in the first place so we need to look at two binding the parties together because if we have no contract then they can both walk away they can stop the project at any time and walk away and that's very very expensive it's not going to keep the project to schedule and that's for sure it's going to result in some unholy mess in front of the courts so come tracks do help to bind at the parties together but bad contracts don't so when we say we think you should use no contracts because actually most letters of intent aren't a good contract so a bad contract is better than no gears worse and no contract because it messes with your head it means we don't know what our expectations of the parties are so if you want to bind yourself to someone if you really want them to work on your project get a proper contract doesn't matter how long it is but get a proper contact and the thing that we talked about was some contracts that letters of intent rip up your contract strategy most contacts result of a tender process the tender process with several months the feasibility stage the pre-contract stage may have been months not years and then just at the last minute when that everything else is perfect there pyramid of cards is ready for the last card somebody just whips out the middle layer and the whole pack of cards falls down we end up with it let you in 10 that's not a strategy that's like hope that's like keeping your fingers crossed and hoping that's going to work so you should work out what your strategy is what you're going to do whether you want your no want no contract you need to use clear letters of intent if you're going to use them at all if you're not going to use clear letters of intent don't bother don't bother at all because you might as well focus your time that you would have spent messing about recycling a letter of intent with getting the other contract signed that would be a better use of anyone's time to get the real contracts are not messing about with some 17 page letter of intent which still says nothing useful and the few of the words you've got in either your letter of intent or your main contractor easier it will be to get it negotiated and agreed and to get it out there and that's what we need to do we need to get people to agree proper contracts to help them to do business and tell them to get their construction project finished on time which is the whole reason we use letters of intent in the first place so that's a two minute summary of everything we've discussed anything else to add did I miss anything no I think I paint you so much it really well since excellent so good I think that comes to the end of our debate about letting intent on no contract I'm not going to tell you the answer because otherwise people might flick just stick to the end but the debate is worth listening to so thank you Sarah thank you very much for your time today so I'm