Difference Between a Letter of Intent & Letter of Commitment

People use letters of intent and letters of commitment in many different situations to show their level of support for an employer or project. These terms are often used in the context of students signing letters of intent or commitment to play college or professional sports. They are also heard in the context of individuals committing to work for large companies. The two types of letters differ in terms of their levels of commitment, format, purpose and time frame.

Letters of intent and letters of commitment are used for two different purposes. Letters of intent are used as negotiating instruments between an individual and another organization. For example, a high school student might be asked to sign a letter of intent to negotiate money and other perks for playing college or professional sports. In contrast, letters of commitment represent the final document between two parties cementing the agreed-upon items for the relationship.

Another difference between letters of intent and letters of commitment is seen in the format of the letters. Letters of intent contain more generalized discussions of terms and conditions, such as confidentiality terms, responsibilities, fees and a period of time in which the individual cannot negotiate with another party. By contrast, letters of commitment contain in great detail the agreed-upon terms and conditions, responsibilities of parties and the laws governing any breach of these conditions. The final letter of commitment also bears the signatures of both parties with the date and possibly a notarized signature.

The biggest difference between a letter of intent and a letter of commitment is the level of involvement expressed by each document. A letter of intent is not a legally binding document whereas a letter of commitment is a negotiated document binding an individual and an employer or other entity. There are legal consequences to breaking a letter of commitment but there are none with a letter of intent. A letter of intent starts the negotiation process but does not set forth agreed-upon conditions for the relationship.

A letter of intent usually is in force between two parties for only a relatively short time, perhaps 30 to 45 days. After that period, the parties will have to renegotiate new terms to be considered in a possible contract. By contrast, a letter of commitment is a legally binding contract that lasts for the duration of time as set forth in the document. This is typically a set of number of years or until a certain project is completed.