Organizations often hire contractors. In most cases, negotiating and signing a contract should precede the beginning of work. In some cases, however, the assignment is too small to warrant a full contract.

LoAs are most commonly used for:

• Small engagements where a full contract would be overkill.
• Work agreements or schedules where a master contract has already been signed and the contractor is continuously re-engaged for short, terminal assignments.
• Projects where work must begin so quickly that there is no time to draft a contract.
• As a pre-contract where project details or the suitability of a contractor are not yet known and committing to a full contract would be premature or unwise.

In the first two cases, a contract is not necessary, provided that the LoA is comprehensive. In the second two cases, a contract should be pursued; the LoA is only an interim step.