Letter of Agreement Template | Simple Business Contracts

What is a Letter of Agreement (LoA)?

A Letter of Agreement (LoA) is a shorter document (about 6-8 pages) generally used for lower value professional services work (such as work worth less than £25,000).

Note: We would recommend technology businesses only use a LoA for professional services, it’s not suitable for managed services as this is generally for longer and higher value engagements.

Though simple, it’s still a legally binding document that outlines the terms and conditions of a business relationship between two parties. As a formal agreement it should include (although not limited to):

Key obligations and responsibilities
Scope of Work
Duration and Termination Rights
Payment Terms
Confidentiality and Intellectual Property Terms

An LoA, when combined with a Statement of Work (SOW), is a great way to get the ball rolling quicker on projects that pose less risk but still require legal protection.

Common uses for Letters of Agreement:

Freelance Projects: When you’re on the hunt for freelancers to tackle tasks like web development, graphic design, or software coding, an LoA can be your best ally. It clearly outlines the project’s scope, payment terms, and deadlines, ensuring everyone is on the same page.
Consulting Services: Engaging consultants for specialised projects? An LoA helps you formalise the arrangement, detailing the specific services they'll provide and the expected outcomes
Short-Term Collaborations: Got a brilliant idea for a new app or a temporary partnership on a project? An LoA lets you hit the ground running by quickly establishing the terms of your collaboration, without the hassle of a lengthy contract weighing you down.
Beta Testing Agreements: If you’re rolling out new software or products and want valuable feedback, an LoA is perfect for outlining the terms for your beta testers. It includes crucial confidentiality clauses to keep your unreleased gems under wraps while you gather insights.
Project Kickoff: When a project demands immediate attention but is lower risk, an LoA can facilitate a speedy kickoff. It formalises essential terms, allowing you to get started right away while a more comprehensive contract is still in the works.

Benefits of using a Letter of Agreement:

Speed and Efficiency: LoAs allow for quicker project initiation, particularly in fast-paced tech environments where time is crucial.
Flexibility: They can be easily tailored to fit the unique needs of each project, making them a versatile option for tech businesses.

Is a Letter of Agreement the same as a contract?

Yes. A Letter of Agreement is a legally binding document and is a form of contract.

LoAs tend to be short, with less provisions and clauses than a typical contract.

With less detail than a huge 50+ page contract, parties could be more exposed to risk when using a Letter of Agreement. We recommend using them for business deals with less value (such as £25,000 or less).

Is a handwritten letter legally binding?

There’s no legal difference between typed and handwritten agreements. Both can be enforced.

A handwritten contract can be as valid as one that's typed or electronic. We would, however, encourage you to use a typed agreement to avoid any issues with the handwriting not being legible.

Why use Cloud Contracts 365’s LoA template?

Our templates are lawyer approved: Quickly draft Letters of Agreement that cover key terms, ensuring legal compliance and peace of mind.
We automatically check against risks: Identify and address potential risks, so your LoAs are watertight and risk-free.
You can effortlessly manage your contracts: Customise, e-sign, and store all your LoAs in one secure place.
It's simple & can save you thousands: Craft tailored LoAs without hefty legal fees or time-consuming back-and-forths.