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5 FAQs about Letter of Agreements (LoA)

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1. What is a Letter of Agreement?

A Letter of Agreement is a 4 page document which sets out basic contractual terms. It's  enough to cover initial scoping or workshops for lower value and less risky projects.

It’s great as it speeds up the sales cycle when you just need to get started with a customer asap for a small piece of work. Hopefully this leads on to a larger piece of work which is when you will enter into a more complex agreement.

2. A letter sounds a bit basic – are you sure a Letter of Agreement gives me adequate protection?

Obviously with less detail, parties may be more exposed to risk. A Letter of Agreement  only covers your basic requirements which is why it’s best suited for small and/or low risk projects (perhaps £20,000 or less) . 

3. Is a Letter of Agreement the same as a normal contract?

A Letter of Agreement is still a formal legally binding document, acting exactly like a contract. It will usually be more suitable than a contract if both parties are already on the same page (excuse the pun!). A valid Letter of Agreement is the same as a valid contract. Just remember – the format of the contract/agreement is not as nearly as important as its contents!

4. What needs to be in a Letter of Agreement?

It really can be very straightforward by simply including, responsibilities of the parties, a limitation of liability clause, payment terms and termination rights as well as boiler plate clauses such as governing law. You can also include a schedule for the Statement of Work where you can set out the services you are delivering.

Read our blog to find out the 10 essentials in a Letter of Agreement (LoA) (

5. When is a Letter of Agreement effective?

Usually when both parties sign it (although there is nothing stopping you from inserting your own agreed commencement date).

Fancy a natter about legal matters?

Are legal worries getting you down? Let the Law 365 team help you grow your business with less risk.

What makes us different?

  • We only work for Microsoft Partners, just like you.
  • We offer our services as a monthly subscription – so you can budget your legal costs for the year. No surprises.
  • We’re your  'in-house’ legal team, but we won’t bog you down in legal jargon.
  • We’ll work at your pace to get deals over the line. Fast.

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