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A letter of agreement is a letter used to outline conditions.

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Sample Letter of Agreement

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Letter Of Agreement: What Is It?

A letter of agreement is a letter used to outline conditions. It may be used for employment conditions between an employer and new employee. It could also be used for an independent contractor who is providing a company with various services. A letter of agreement outlines expectations and protects both parties.

The letter should include as much information as possible about the project or employment offer. This will ensure that both parties are protected to the full extent. Be sure to include information about payments, service quality, and job duties.

In order to be legally binding, the letter will require the signatures of both parties. A witness may also need to sign. The letter of agreement can serve as a contract in some cases, so it is important to double check the information and clarity of the form.


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Contents of a Letter of Agreement

contents of a letter of agreement

Formal negotiations are all well and good, but how do businesses and contractors cement a deal once it's been made? The answer is simple - a letter of agreement. A letter of agreement formalizes a business deal by clearly stating in writing the terms of the agreement. Your standard letter of agreement template consists of a few basic components. To make life easier, we've outlined these below.

Opener

This is simple. State the purpose of the letter of agreement. Feel free to keep it as short as one or two sentences - you don't need to divulge details at this stage of the letter. Your opener should say something like this:

The purpose of this letter of agreement is to define the terms of the upcoming merger between Barty Blackfish and Mean Green Steam Machine, Ltd.

Boom. You're done. Now you can move on to the details .

Services Rendered

In this section, describe exactly what each party promises to do for the other, with the exclusion of compensation (that needs its own section). For example:

Barty Blackfish agrees to write a three-page pamphlet promoting the goods and services of Mean Green Steam Machine, Ltd. Information for the aforementioned pamphlet will be provided exclusively by Mean Green Steam Machine, Ltd. Mean Green Steam Machine, Ltd. will also cover 100% of the cost of printing and distribution.

Fee

This is fairly self-explanatory. State the amount of compensation the company will provide to the contractor. For example:

Mean Green Steam Machine, Ltd. agrees to pay Barty Blackfish a flat fee of $3000 for timely completion of the aforementioned brochure. Compensation hinges upon the brochure being completed in a timely manner and meeting the specifications instigated by Mean Green Steam Machine, Ltd.

Additional Costs

Any exceptions to the fee terms mentioned above should be defined in this section. It should be made clear which entity will accept responsibility for reasonably outstanding circumstances, such as unexpected costs induced by delay or third-party intrusion.

Timeline

Here, it should be made clear what exactly "timely fashion" means. For example:

Barty Blackfish agrees to provide the aforementioned brochure in its completed form to the Mean Green Steam Machine, Ltd. by April 24, 2013.

Payment Terms

How does this section differ from the "fee" section, you may ask? The " payment terms " section details the basis on which the contractor will receive payment. For example:


$1500 will be submitted to Barty Blackfish within three days following the signing of this letter of agreement. The remaining $1500 will be issued to Barty Blackfish upon timely completion of the project.

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Letter of Agreement

A letter of agreement outlines the terms and conditions of a potential contract. A letter of agreement may contain the services or goods that will be provided, deadlines associated with receiving the items, and the cost. If both parties sign a letter of agreement, it is treated like a legally binding contract.

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