Contract Glossary
Letter Agreement
Definition
A binding contract formatted as a business letter rather than a traditional legal document. One party writes a letter outlining the terms, and the other party signs it to indicate acceptance. Despite the informal format, a properly drafted letter agreement is just as legally enforceable as a multi-page contract — it simply strips away the legalese and gets to the point.
In Practice
A freelance photographer agrees to shoot a company's product catalog. Instead of a 15-page services agreement, the company sends a one-page letter: 'Dear [Photographer], this confirms our agreement for you to photograph 50 products at our studio on April 15-17, 2026. We'll pay $5,000 upon delivery of edited files. You retain copyright but grant us unlimited commercial use. Please sign below to confirm.' The photographer signs and returns it. Done — binding contract, no lawyer needed for a straightforward engagement.
Example Clause
Dear [Party B], This letter confirms the agreement between [Party A] and [Party B] regarding [subject]. The terms of our agreement are as follows: [terms]. If the foregoing accurately reflects our mutual understanding, please indicate your acceptance by signing in the space provided below and returning a copy to the undersigned. This letter agreement shall be binding upon execution by both parties.
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Frequently asked questions about letter agreement
Yes. Courts care about substance, not format. If a letter agreement contains the essential elements of a contract — offer, acceptance, consideration, and mutual assent — it's enforceable. The format as a letter doesn't diminish its legal weight. Many significant business transactions, including employment arrangements and settlement terms, are documented as letter agreements.
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Create your contractThis content is for informational purposes only and does not constitute legal advice. For contracts with significant financial or legal implications, review by a qualified attorney is recommended.