Letter of Understanding

A letter of understanding is basically a document that reaffirms the issues or verbal agreements discussed in a prior conversation. For example, if you were to have a meeting with a consultant, and you make a deal, but no contracts are drawn up or signed, he may send you a letter of agreement reaffirming everything that was said and verifying your commitment to a deal. This letter is not a legally binding document, but more of a common courtesy between two people trying to make a deal.


Starting to Write


Reference any previous meetings or correspondence.


Outline the terms discussed and the positions of both parties, making it clear what you agree on and what may need further discussion.


If your agreement requires a formal contract, remind the recipient of such.


Keep the letter brief, this will usually be about reiterating the points from a previous discussion.

Sample Letters

Letter of Understanding Sample

Kathleen B. Talmage

34 Golf Course Drive
Arlington, VA 22201


Dear Mrs. Talmage,

I want to once again thank you for coming in for a meeting with me on Friday, October 7th, 2009. I think we made some great progress towards reaching your goals.


As per our meeting, I just want to reaffirm the agreement we made:


1) I will act as your business consultant until the end of 2009.

2) I will handle everything in terms of sales and sales training

3) I will be compensated with a base salary of $3200 per month, plus 30% of the commissions my sales team makes.


Please respond to verify that the contents of this letter are correct and you wish to continue pursuing our relationship!



David Lee

Letter of Understanding and Agreement Sample

Dear Mr. Rhodes,

In regard to our recent discussion on June 03, 2011, Milton’s History Museum would be delighted to accept your father’s painting collection for public display.


We understand your concern about possible wear and tear, and confirm that we will prop the paintings on platforms too high for the public to touch and within their current glass casings, something you explain your father was pedantic about.


We also understand your desire to access the paintings freely, which will not be a problem so long as you give us a day’s advanced warning so we can inform our security team.


Our professionals will be tasked to maintain the works, but should you wish to carry out your own maintenance we can discuss this further.


If you wish to proceed with this agreement please get in touch and we can draft a formal contract if you it necessary.



Mr. Warner

Head of Art