The Letter of Intent for Subcontractor is a crucial preliminary document used in Nigerian business practice when a main contractor intends to engage a subcontractor but requires certain preliminaries before executing a full subcontract agreement. This document type is particularly important in Nigeria's complex regulatory environment, where projects often require careful structuring to comply with local content requirements and sector-specific regulations. The LOI typically includes essential commercial terms, scope outlines, and binding confidentiality provisions while maintaining flexibility for final contract negotiations. It's commonly used in large-scale projects where immediate mobilization may be required before finalizing comprehensive subcontract documentation, or where regulatory approvals are pending but preliminary commitment is necessary.
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1. Parties: Identification of the main contractor and subcontractor, including full legal names, registration numbers, and addresses
2. Background: Context of the project, relationship between parties, and reference to the main contract (if applicable)
3. Definitions: Key terms used throughout the letter of intent
4. Purpose and Intent: Clear statement of the purpose of the LOI and which provisions are binding vs. non-binding
5. Scope of Work: High-level description of the intended subcontract works
6. Duration: Validity period of the LOI and expected timeline for finalizing the formal subcontract
7. Commercial Terms: Preliminary agreement on key commercial terms including pricing structure and payment terms
8. Conditions Precedent: Conditions that must be met before proceeding with the final subcontract
9. Confidentiality: Binding provisions regarding confidentiality of discussions and shared information
10. Governing Law: Specification of Nigerian law as the governing law
11. Signatures: Execution block for both parties
1. Early Works Authorization: Optional section authorizing the subcontractor to commence certain preliminary works before the final subcontract is executed
2. Exclusivity: Optional provision preventing the subcontractor from engaging with other contractors for the same scope during the LOI period
3. Break Fee: Optional clause specifying compensation if either party withdraws from negotiations without justified cause
4. Local Content Commitment: Required for oil and gas projects, outlining commitment to Nigerian content requirements
5. Advance Payment: Optional section detailing any advance payment terms if work is to commence under the LOI
6. HSE Requirements: Optional section for high-risk works requiring immediate compliance with Health, Safety and Environmental standards
1. Schedule 1 - Preliminary Scope of Work: Detailed description of the intended works and deliverables
2. Schedule 2 - Preliminary Commercial Terms: Indicative pricing, payment terms, and commercial conditions
3. Schedule 3 - Key Personnel: List of key personnel from both parties involved in the project
4. Appendix A - Required Documentation: List of documents required from the subcontractor (certificates, permits, insurances)
5. Appendix B - Timeline: Preliminary project timeline and key milestones
6. Appendix C - Form of Non-Disclosure Agreement: If confidentiality is critical and requires separate execution
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