A Letter of Understanding (LOU) is a formal text that sums up the terms of an undertakings of a

contract A contract is a legally enforceable agreement between two or more parties that creates, defines, and governs mutual rights and obligations between them. A contract typically involves the transfer of goods, services, money, or a promise to tran ...

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 A project is any undertaking, carried out individually or collaboratively and possibly involving research or design, that is carefully planned to achieve a particular goal. An alternative view sees a project managerially as a sequence of even ...

or a deal and is often written as a step before a more detailed contract is issued. The LOU may provide for example: * Detailed summary of the work to be performed * Tasks of the

service provider A service provider (SP) is an organization that provides services, such as consulting, legal, real estate, communications, storage, and processing services, to other organizations. Although a service provider can be a sub-unit of the organization t ...

and the receiver *

Milestone A milestone is a numbered marker placed on a route such as a road, railway line, canal or boundary. They can indicate the distance to towns, cities, and other places or landmarks; or they can give their position on the route relative to so ...

s for the work to be done * Work steps that have been accomplished already

References

{{reflist Law and economics