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Agreement Letter

What is Letter of Agreement?

Letter of agreement is used between:

  • Employee and employer
  • Contractor and company
  • Customer and vendor
  • 2 neighbours
  • 2 companies

It can be said that such letter defines expectation of both the parties. In order to protect both the parties, it is advisable to add as much information as possible in the letter. This information can be related to job duties, quality of services, payment details, deadlines, time periods, schedules, cost of the project etc. Legally letter is valid only when both the parties provide their signatures. In some cases, a signature of the witness is also needed.

Also double check the information you have added in an agreement letter because in certain cases such letter is also served as a contract. In order to simplify arrangements between 2 parties, such letter is needed.

Agreement letter cannot be:

  • Vague
  • Confusing or
  • Indefinite

If it is vague, confusing or indefinite then the letter may be stated as an invalid document.

How to Write an Agreement Letter?

Don’t make use of complicated English while writing a letter of agreement. Always make use of plain English and don’t show off by using legal jargon. Legal Jargon can be confusing for both the parties.

Cover unexpected contingencies

In your agreement letter, there should be a paragraph which covers unexpected contingencies. You are not god, to know the future. So it is important to keep that margin or leeway in your letter that can protect you from unexpected circumstances.

For example, you have signed a letter of agreement with the contractor who is going to add a new roof to your home. He has promised to complete the work in one week. Sudden change in weather, invited rains and this made it difficult for the contractor to complete the work in said time period. In such situation, a clause of unexpected contingencies can come to the rescue of the contractor.  

Laws differ from state to state

The items, that you include in your letter should be added in points or numbers. In future, this habit can make it easy for you to refer the agreement letter. Add points, after considering the law of the state where you are working or residing. According to the law, if legal limits have been crossed then your letter cannot be sustained in the court.

Basic Reasons for Drafting Letter of Agreement

Drafting letter of agreement can become difficult, if you don’t know when exactly to draft a letter. Following are the few reasons, when you can draft the letter of agreement:

  • If you are entering into new business relationship
  • If you are ready to get into the agreement that defines working terms and conditions
  • If you want to define monetary contribution of investor

There are many such reasons when you can draft such a letter. Why is it so important to write a letter of agreement? Is it useful? Yes, it is very useful because you can use it to start negotiations. In certain situations, it is also used as a formal business contract.

Difference Between Contract and Letter Agreement

What is the difference between contract and agreement letter? There is nothing empirically different but such letter agreements are said to be the subdivision of contracts.

First, you need to know, what is a contract? The contract is something, that is related to offer and acceptance with definitely certain considerations. It can be said that agreement letter, is one form of contract. Going by the typical definition, if you have a valid letter of agreement then definitely you can have a valid contract.

It is very important to work legally while drafting a letter of agreement because it can easily go invalid. Some of the reasons that make such agreement voidable are like:

  • Going against public policy of the state
  • Drafting overly comprehensive agreement
  • Lack of consideration

Effective Agreement Letter Writing Tips

Now you know that, this agreement letter can be your legal document and so it becomes important for you to draft it carefully and intelligently. It is important for you to follow below-mentioned tips while creating letter of agreement:

  • Foundation of your letter should be strong and it is possible when you know the clauses that are needed to be added in the letter.
  • Any kind of vagueness in the letter can harm both the concerned parties.
  • It is important for you to pay attention to some minute details related to agreement date, goods description, the name of the concerned parties, profit sharing ration etc.
  • When two parties come together for the particular venture, it becomes important to mention the reason clearly in a letter.
  • Don’t forget to add the title of a venture.
  • It is important to mention the duties and rights of all the parties in order to avoid future disputes.
  • A good letter of agreement is the one, in which you do not leave anything to chance or destiny. So it is advisable to mention even the simplest duties and rights.
  • Mention details related to liability of members to the third party. Here the third party means, the party which is not the part of agreement letter or contract.
  • Ask for professional assistance if you are finding it difficult to define the terms and conditions in the letter.
  • In order to make it a legal document, you should ensure that all the concerned parties have signed the letter of agreement. You should get the letter registered with the right authority.
  • As said before, the language of the letter should be simple so that everyone can easily understand legal terms.

Important Components Related to Agreement Letter Writing

Letter of an agreement is like an exchange of promises that is done in order to complete a particular action or to define a particular relationship. From individuals to business firms, all can draft such a letter. When some kind of communication and interaction comes on a piece of paper, it becomes an agreement letter. Given promises and agreed policies are discussed in this type of letter.

This type of letter is an important tool for business communication. First, it is important for you to create the rough draft so that any kind of required changes can be made easily in the later stage.

Date, your name, place, the name of business, mailing address, zip code, proper title, recipient’s name, salutation, paragraphs, closing statement, signature etc. are few things that need to be the part of your agreement letter.

Sample Letter of Agreement

Last Updated On August 16, 2018 By Letter Writing Leave a Comment

The letter of agreement includes all the terms for any work agreed upon between two parties and things like cost, dates of initiation and period of completion, schedule, etc. It’s a great way of ensuring that both sides are on the same page regarding the undertaking at hand. An agreement is an easy way to […]

Filed Under: Agreement Letter

Termination of Lease Agreement

Last Updated On November 21, 2016 By Letter Writing Leave a Comment

The termination of lease agreement denotes fulfilling the term of contract successfully. It can be written even in case either of the parties is not willing to go on with the contract. The termination of the lease agreement should be in tune with the provisions agreed upon in the contract letter. Otherwise the other party […]

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Sale Agreement Letter

Last Updated On June 27, 2018 By Letter Writing Leave a Comment

The sale agreement letter normally falls under the category of letters that are written for acceptance or rejection of orders. Such orders can be placed with the supplier and dealer. It can also contain various elements like the price quotations, estimate mode of payment, date of delivery, transport details, dispatch options. Through this letter, all […]

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Settlement Agreement Letter

Last Updated On September 20, 2018 By Letter Writing Leave a Comment

This letter is an agreement letter which indicates the conditions and guidelines regarding the transfer of funds from one party to the other. The important viewpoints of such a letter include the amount, time, interest, and other similar aspects.  Customarily, it is an employer and employee (or former employee) who are the contracting participants to […]

Filed Under: Agreement Letter

Rental Agreement

Last Updated On June 27, 2018 By Letter Writing Leave a Comment

The rent agreement letter is drafted in the context of an agreement between the owner of a particular place and the client. The rent agreement should be free from grammatical errors to keep in mind the interests of both the parties. The document should act as combined evidence in the case of a dispute. This can […]

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Party Wall Agreement Letter

Last Updated On August 13, 2018 By Letter Writing Leave a Comment

An agreement letter is always written keeping in mind the interests of both the parties, they are mutually agreed upon and drafted accordingly. All the details mentioned in the letter should be explicit and brief. Before initiating this letter, the terms and conditions are negotiated between the owner and the client so that the concerns […]

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Letter Of Agreement Format

Last Updated On January 3, 2017 By Letter Writing Leave a Comment

The letter of agreement format is a formal and legal format wherein both the parties, the party who render the service and the second party who accept the service, highlight their terms and services. The agreement letter has implication on any item under the sun from loan, rent, purchase and anything and every thing from […]

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Letter Of Agreement Template

Last Updated On September 7, 2018 By Letter Writing Leave a Comment

Letter of agreement template should consist of the letter format which should contain the main provisions of the agreement and its allied clauses and provisions in it. These letters are prepared when a new business relationship is formed. The letter of agreement template should be made in such a way that the needs of both […]

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Letter Of Understanding & Agreement

Last Updated On September 10, 2018 By Letter Writing Leave a Comment

The letters of agreement and understanding are used to make clear working arrangements between two parties. It can be between anyone like a homeowner and a contractor; a consultant and a client; a vendor and a customer; a business department and senior management. In the case, the relationship is between a vendor and a buyer […]

Filed Under: Agreement Letter

Loan Agreement Letter

Last Updated On July 20, 2018 By Letter Writing Leave a Comment

While most people would prefer not to have a loan from a bank, there are very few sources from which a person can gain capital for whatever activity or reason, which is certified by law and doesn’t possess the threat that one encounters when borrowing money from loan sharks. When a person applies for a […]

Filed Under: Agreement Letter

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