What Is The Difference Between a Letter Of Intent And a Letter Of Award?

Difference Between Letter Of Intent And a Letter Of Award

Any written or printed information conveyed from one person to another is called a Letter. They have been a significant official and unofficial way to communicate for ages and never went out of fashion. Letters are differentiated based on uses, purpose, information, and many more and is broadly categorized as formal and informal letters. Letter of Intent and Letter of Award come under Formal Letters. Let’s know the Difference Between a Letter Of Intent And a Letter Of Award.

Letter of Award (LoA) confirms an award or a contract by a customer to the bidder, formally written in the form of a formal letter. The LoA is only issued to the successful bidder, who has fulfilled all the customer’s requirements. It contains the information of the bidder, bidding price, award date, and the signature of both parties. At the same time, a Letter of Intent (LoI) is a nonbinding agreement, which contains the prerequisite terms and conditions of a final agreement. 

LoI keeps the contract legal and binds the terms of negotiation. Moreover, it defines the further procedure of the contract. It is evident that there are LoA and LoI; some provisions govern both. But apart from the dissimilarity, they both are confidential and validated by both parties. On the other hand, a Memorandum of Understanding (MoU) is a contract similar to LoI, but the only difference is that this agreement can take place between two or more two parties. All the letters play a vital role in the professional segment, which is different from each other.    

Purpose of Letter of Intent

Letter of Intent is the first contract that both parties sign. The fundamental points in the agreement are finalized and jotted in the form of points. LoI keeps track of which topics should be negotiated at the time of concluding the deal. It helps protect both parties on the contract, as no one can back out from their words. It is the responsibility of LoI which declare the nature of the collaboration of two parties. The LoI is also important for publicizing the deal and also sets the period to complete the project.

Purpose of Letter of Award

Letter of Award, in its name, denotes that the letter has been issued to an authority that has won a bid or tender. It is a formal process to notify that the bidder bagged the tender and will be the supplier for the coming specified time. The letter contains all the valuable information, a tenderer, and customer needs. In big tender or projects, a reasonable period is given so that any other competitor can object to unfairly selecting the winner. LoA serves the purpose of allowing them to begin the preparation of the material, permissions, and labor.

Tips To Write LoI

Letters in standard formatting should follow specific rules and criteria. The LoI should be drafted appropriately, for which particular tips to be followed:

  • The issuer should choose the format and layout of the letter wisely.
  • Both parties should research each other before signing the letter.
  • The draft should be precise and crisp and should cover all the points.
  • LoI should mention the targets, and in case of delay, the extension should be defined.
  • The letter should clearly state the allocation of the cost, expenses, and fees.
  • The details of both parties should be mentioned.

Tips To Write LoA

LoA serves a different purpose than LoI; due to this, the points to consider in LoA are other than LoI.

  • Authorities should issue the letter under the giving or hiring manager and addressed it to the winning bidder.
  • The information presented in the letter should be accessible by every other bidder as well.
  • The scope of the work done, be mentioned along with the contract sum.

Uses of Letter Of Intent

It is the purpose that governs the use of a Letter of Intent. Apart from the business purpose, the letter has many more benefits.

  • Joint Venture

When two companies or businesses want to work on a particular project while remaining independent, Joint Venture, LoI is signed between the parties specifying the terms.

  • Real Estate Purchase and Lease

The LoI can be signed between buyer and seller to safeguard the agreement terms. As no parties can deny signing the LoI

  • Scholarship For Athletes

Apart from the business purpose, the LoI is also important in academics and sports. LoI, in this case, specifies an agreement to attend the competition. Once an LoI has been established between them, no other institute can contact the students for recruitment.

Uses of Letter of Award

Similar to LoI, LoA also have various benefits.

  • Legal Tender

Legal tender of supplies to government offices, schools, armed forces or institutions, uses LoA.

  • Contract

LoA also bind any infrastructure or service contract.


Letter of Intent and Letter of Award are two different letters issued from one party to another. They also serve other purposes and are equally important. Their limitation doesn’t only end up for one purpose, but for many different purposes, from contracts, deals, tenders, college competition, and many more. 

Frequently Asked Questions

  1. Are LoI and MoU similar terms?

No, they are slightly different terms, which are used for another purpose.

  1. What are the other names of LoI?

Letter of Intent is also called a Letter of Interest, Assurance letter, Framework letter, and Terms sheet.

  1. Can LoI and LoA be withdrawn?

Yes, both can be withdrawn in good faith.

What Is The Difference Between a Letter Of Intent And a Letter Of Award?

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