It is a common practice in certain sectors where parties enter into a short form agreement, typically a letter of offer or letter of award which requires the parties to enter into an agreement within a specified period of time. The second agreement sets out the detailed terms and conditions. Such practice is commonly seen in banking facility agreements and construction related agreements.

The terms and conditions of the letter of offer or letter of award are usually legally binding and incorporated into the detailed agreement.

Parties should check the terms and conditions of the letter of offer or letter of award carefully and sign only if they agree to the terms and conditions.

They should not sign the letter of offer or letter of award thinking that they could change the terms and conditions later when they enter into the detailed agreement.

Once accepted, any amendment to the terms and conditions of the letter of offer or letter of award is subject to the other parties’ consent, which may not necessarily be forthcoming.

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This post was first post on Linkedin on 24 February 2021.