What is a Letter Of Intent To Award Construction Contract?
The Letter Of Intent To Award Construction Contract is a crucial document in the UAE construction industry that bridges the gap between contractor selection and formal contract execution. It is typically used when there is agreement on major commercial terms but the main construction contract requires additional time for finalization. This document, while not usually intended to be a binding contract itself, carries legal weight under UAE law and must be carefully drafted to reflect the parties' intentions accurately. It serves multiple purposes: confirming the selection of the contractor, enabling preliminary works or mobilization, and documenting key commercial terms and conditions precedent. The document must comply with UAE Federal Law No. 5 of 1985 (Civil Code) and relevant construction regulations, making it an essential tool in UAE construction project initiation.
About the Letter Of Intent To Award Construction Contract
A Letter Of Intent To Award Construction Contract is a pre-contractual document that formally notifies a contractor of your intention to award them a construction project in the United Arab Emirates. While not typically a binding contract itself, this document carries legal significance under UAE Federal Law No. 5 of 1985 and serves as an important bridge between contractor selection and formal contract execution.
When do you need this document?
You need this letter when you have selected a contractor through your tendering process but require additional time to finalize the main construction contract. This commonly occurs in large-scale UAE construction projects where complex commercial terms, technical specifications, or regulatory approvals need further negotiation. The document enables you to secure the contractor's commitment while allowing preliminary works such as site mobilization, material procurement, or detailed design development to commence. It is particularly valuable when market conditions require quick project initiation or when seasonal factors affect construction schedules in the UAE's climate.
Key legal considerations
Under UAE law, you must clearly define whether the letter creates binding obligations or merely expresses intent. Include specific conditions precedent such as obtaining construction permits, securing project financing, or completing due diligence requirements. Clearly state the contract value, scope overview, and timeline expectations to avoid disputes. Address liability limitations, intellectual property rights, and termination procedures should the main contract not materialize. Consider including confidentiality provisions and specify governing law clauses. Be particularly careful with language around commencement of works, as premature site access could create unintended contractual relationships under UAE Federal Law No. 5 of 1985.
Legal requirements in United Arab Emirates
Your Letter Of Intent must comply with UAE Federal Law No. 5 of 1985 (Civil Code) governing contractual relationships and UAE Federal Law No. 18 of 1993 (Commercial Code) for commercial transactions. In Dubai, ensure compliance with Dubai Local Order 3 of 1999 regarding construction practices and contractor obligations. Include proper identification of all parties, project details, and clear reference numbers for tracking purposes. The document should specify applicable UAE laws and jurisdiction for dispute resolution. Consider requirements under UAE Federal Law No. 8 of 1980 (Labor Law) if the letter enables contractor mobilization involving workers. Ensure the letter is properly executed with authorized signatures and, where required, attested or notarized according to UAE legal requirements for commercial documents.
Governing law
Applicable law
This Letter Of Intent To Award Construction Contract is drafted to comply with United Arab Emirates law. Key legislation includes:
UAE Federal Law No. 18 of 1993 (Commercial Code): Regulates commercial transactions and business relationships between parties, relevant for construction contracts and commercial agreements.
UAE Federal Law No. 8 of 1980 (Labor Law): Important for construction contracts as it governs employment relationships and worker rights in construction projects.
Dubai Local Order 3 of 1999: Regulates construction practices in Dubai, including contractor obligations and construction permits (relevant if the project is in Dubai).
UAE Federal Law No. 24 of 2006 (Consumer Protection Law): Relevant for construction contracts involving residential properties or end-user facilities.
Municipality Building Regulations: Local municipality regulations that govern construction standards and requirements, which need to be referenced in construction contracts.
UAE Cabinet Decision No. 31 of 2019: Concerning construction sector regulations and health and safety requirements at construction sites.
