From Financial Caps to Court Cases: What Every Subcontractor Needs to Know About Letters of Intent

From Financial Caps to Court Cases: What Every Subcontractor Needs to Know About Letters of Intent

From The Subcontractors Blueprint by Jacob Austin

April 5, 2026 · 20 min

About this episode

Jacob Austin discusses the risks associated with letters of intent for subcontractors and provides practical advice for navigating these challenges.

In episode 137 of The Subcontractors Blueprint, Jacob Austin of QS.Zone breaks down the real risks of letters of intent (LOIs) for subcontractors. He explains how financial caps embedded in LOIs can leave subcontractors unable to recover costs already incurred — a situation courts consistently uphold. Jacob outlines the common trap of continuing work past the cap while waiting for a formal contract that never arrives. He provides practical safeguards, including stopping work at 80% of the cap, documenting all correspondence, and consistently pushing for a formal subcontract. His core message: understand what you're signing before starting work. KEY TAKEAWAYS: The UK government has announced a ban on retention payments in construction contracts, marking a major shift for the industry. New legislation will also cap payment terms at 60 days, mandate statutory interest on late payments, and empower the Small Business Commissioner to fine persistent offenders. Specialist contractor trade bodies have welcomed the changes, while some client groups warn of potential quality risks. Main contractors may adapt by backloading payment schedules and tightening quality controls instead of using…

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