Software Development Letter of Intent (LOI)

A software development letter of intent is a letter in which the writer (a software developer) expresses their interest in working for a potential client. Letters of intent are preliminary agreements between two parties expressing their intention to do business with each other. As such, they are usually nonbinding agreements that precede an enforceable contract signed by both parties.

In this article, you will learn the essential elements of a software development letter of intent. We provide a format you can use to write your letter of intent and a sample letter for you to read.

Essential Elements of a Software Development Letter of Intent

Your letter of intent is a bid to develop software for a potential client. When you write this letter, you should include details about the job you propose to your potential client. In this section, we discuss each of the essential elements of an effective software development letter of intent. We discuss them in the order they should be included in your letter.

Effective Date

The effective date is the date you write the letter. This date signifies the beginning of the period in which the letter’s terms are valid.

Subject Line

Your subject line should be clear and concise. An appropriate subject line could read, “Intent to Develop Software.”

Names of Concerned Parties

Clearly state your company’s name and the potential client’s name. Correctly identifying the parties concerned is essential in any professional letter of intent.

The Project

A description of the project. Your description should be concise but include the entire scope of the project in a broad sense. If the project consists of multiple steps, have each step in this description.

Statement of Your Qualifications

A discussion of your qualifications should include your education, experience, and relevant skills. Use this part of your letter to convince the reader you are qualified to complete the proposed job successfully.

Include your degree and all certifications that you hold. If you have specialized skills that enable you to perform the proposed job, include a statement of these skills.

Compensation

Clearly state the amount you expect to be paid for developing the software as proposed. If you want to be paid a lump sum for the job, include this amount with the words “Fixed Rate.”

Other Benefits

This area describes additional benefits your software company will receive. If you plan to charge extra for overtime, include that information here. Also, have information about extra pay for completing the job by a specific date, stocks you will receive, or any other benefits you expect to receive for completing the job.

Payment Terms

Describe when and how you expect to be paid. Requesting payment upon completing the job to the client’s satisfaction is common, but you can set any payment terms that work for you and the client. If you expect a check or cashier’s cheque, include that information here.

Start Date

The start date is the date you plan to begin the proposed work.

End Date

The end date is the date by which you must complete the job.

Binding Effect

Clearly express whether the letter of intent is binding or nonbinding. This critical piece of information can save you time and money later down the road by preventing misunderstandings that could lead to lawsuits. Letters of intent are almost always nonbinding, which means that the terms are not enforceable by law.

Currency

Include a statement of the currency in which you expect to be paid, such as the US Dollar.

Governing Law

Write a statement that includes your state’s law as the governing law for your letter of intent. You can write, “This letter of intent is governed by the laws of the state of {your state}.

Signatures

Sign and date your letter of intent to develop software. Include a space for the potential client to sign to accept the terms included in the letter of intent.

Later, you and the client may enter into a binding agreement or contract based on the terms of your letter of intent.

Format – Software Development Letter of Intent

{your name}

{your address}

Effective Date: {date you write the letter}

{client’s name}

{client’s address}

RE: Intent to Develop Software for {client’s name}

Developer: {your name)

Client: {client’s name}

The project: {describe the project here. Include each step that the job encompasses. For instance, if you intend to develop software, install the software, and train employees to use the software, write each of these three steps here.}

Qualifications: {List your qualifications here. Include your education, special skills, and experience. Also, list any certifications you have.}

Compensation: {Write the amount of payment you expect for your work on this job. Specify if you will be paid by the hour or a fixed rate.}

Other Benefits: {Detail any other benefits you will receive for your work. For example, you might expect overtime pay or additional pay for completing the job early.}

Payment Terms: {state how and when you will be paid.}

Start Date: {The date you will begin the job.}

End Date: {The date by which you will finish the job.}

Binding Effect: {Clearly state if the terms of the letter are binding or nonbinding.}

Currency: {State the currency in which you will be paid.}

Governing Law: The terms of this letter of intent are governed by the laws of the state of {your state.}

Developer: {your signature, the date you sign}

Client: {client signature, the date they sign}

Sample – Software Development Letter of Intent

David Johnson

Effective Software Development, Inc.

2046 West Harvard

Denver, NY 28956

Effective Date: September 2, 2038

Sadie Howard

Uptown Fashion

40928 East 101

Denver, NY 28958

RE: Intent to Develop Software for Uptown Fashion

Developer: David Johnson, Effective Software Development, Inc.

Client: Sadie Howard, Uptown Fashion

The Project: The developer intends to: Create sales and accounting software for Uptown Fashion, Install the software, Train Sadie Howard and Elizabeth Fallen in the use of the software.

Qualifications: Bachelors Degree in Computer Science and Software Engineering from Jefferson University; Software Engineering certification in Texas and New York; 12 years of independent software engineering experience.

Compensation: Fixed Rate: $3,900.00

Other Benefits: None

Payment Terms: The client will pay the developer the amount of $3,900.00 in the form of a business check within 30 days of project completion to the client’s satisfaction.

Start Date: October 2, 2038

End Date: October 12, 2038

Binding Effect: The terms of this letter of intent are nonbinding and not enforceable in a court of law. The terms are solely for the purpose of reaching an agreement at a later date for the benefit of both parties.

Currency: The currency is the US Dollar ($)

Governing Law: The terms of this letter of intent are governed by the laws of the state of New York.

Developer: David Johnson September 2, 2038

Client: Sadie Howard September 4, 2038

Software Development Letter of Intent (Word Template

Software Development Letter of Intent

Conclusion

Your software development letter of intent serves as a bid for the job you intend to perform for the client. These letters are generally nonbinding. Be sure you include all of the details of the project and the compensation you expect to receive.

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