Engagement letter

Engagement letter

Engagement letters are often used by auditors, accountants and lawyers who want to enter into a written agreement with a client. If you have been asked to provide a letter of engagement but are unsure of what one is, here we define what a legal engagement letter truly is so that you can create one with confidence.

What is an engagement letter?

An engagement letter is a document that one party sends to another which details what an agreement may look like for both parties. It will often be between a client and a company and will outline what the future business relationship between the parties will consist of. In that way, an engagement letter will outline what the terms of the proposed business arrangement will be as well as any fees and how those fees are structured. 

An engagement letter can be a contract and a legally binding agreement between two parties - if all elements of a legally binding agreement are adhered to. 

How does an engagement letter work?

An engagement letter works very similarly to a contract - by outlining all the necessary information required so that both sides are fully aware of their obligations. In that way, an engagement letter should detail limitations of liability, withdrawal provisions, how intellectual property should be dealt with in terms of ownership and any confidentiality issues that need to be addressed. 

Advantages of an engagement letter 

A really important advantage of an engagement letter is the fact that they reduce liability and clearly provide details on what is expected of both parties. That means on one side, the services that are to be provided, to what standard, and when. On the other side, it means knowing what the price is on those services as well as how they should be paid for and in what time frame. 

An engagement letter is therefore an opportunity to start a business relationship off on a strong footing. By outlining what a business arrangement will look like, both parties know what is expected of them - and because it is a legal document - it means that those expectations are likely to be realized. 

It also means that both parties start off the relationship with the fullest knowledge possible. So, by outlining how billing works, one side of the letter is not stung with an invoice they did not foresee or can afford. For the other party, it means that they know the demands of the customer and what the customer wants to receive in return for that payment. 

Contractbook and engagement letter

Contractbook can help produce an engagement letter template for you or your business so that you can be confident you have produced an engagement letter sample that can be relied upon in the future - and used time and time again. In doing so, we reduce the amount of time you spend on generating such a document, but also ensure that it is accurate and reliable so as to provide you with solid legal protection should you need it. 

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