Harman Patil (Editor)

Letter of understanding

Updated on
Edit
Like
Comment
Share on FacebookTweet on TwitterShare on LinkedInShare on Reddit

A Letter of Understanding or LOU is a formal text that sums up the terms and understanding of a contract which mostly has been negotiated up to this point only in spoken form. It reviews the terms of an agreement for a service, a project or a deal and is often written as a step before a more detailed contract is issued.

The LOU may provide for example:

  • detailed summary of the work to be performed
  • tasks of the service provider and the receiver
  • milestones for the work to be done
  • work steps that have been accomplished already

    • The Letter of Understanding may also introduce key contractual elements, like payment terms.

    References

    Letter of understanding Wikipedia
    (Text) CC BY-SA