Definition: Consultants may provide a new client with a LOU, or Letter of Understanding. This is a formal, written letter that reviews the terms of agreement for a proposed project and the contract that will be issued for the project. The LOU may provide such things as a detailed summary of the work to be performed, responsibilities of the consultant and the client, identify agreed-upon milestones for the work, and introduce key contractual terms (such as payment terms). A letter of understanding often summarizes a verbal agreement to made with a client to initiate a project.
Also Known As: LOU