{{Short description|Formal text that sums up the terms and understanding of a contract}} {{about|pre-contractual matters|an intended common line of action|memorandum of understanding|financial obligations|Letter of credit}}
A '''Letter of Understanding''' ('''LOU''') is a formal text that sums up the terms of an undertakings of a contract which may have been negotiated up to this point only in spoken form or otherwise informally. It reviews the terms of an agreement for a service, a project or a deal and is often written as a step before a more detailed contract is issued.<ref>{{cite web |url= http://consulting.about.com/od/glossaryfaq/g/CF_LetterUnd08.htm |title= Benefits of Developing a Written Consulting Contract |website= About.com |series= Consulting |first= Shannon |last= Belew |date= 2018 |access-date= 2010-10-25 |archive-date= 2009-06-11 |archive-url= https://web.archive.org/web/20090611112408/http://consulting.about.com/od/glossaryfaq/g/CF_LetterUnd08.htm |url-status= dead }}</ref>
The LOU may provide for example: * Detailed summary of the work to be performed * Tasks of the service provider and the receiver * Milestones for the work to be done * Work steps that have been accomplished already
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Category:Law and economics