A Letter of Engagement (LOE) is a formal, legally binding document that outlines the terms and conditions of a business relationship between a professional service provider (such as a consultant, accountant, attorney, or real estate agent) and their client. It serves to clarify the scope of work, payment terms, and expectations of both parties, ensuring that all aspects of the agreement are clearly understood and agreed upon.

To be effective, a Letter of Engagement must be drafted in clear and unambiguous terms, avoiding any potential for misinterpretation. Both parties should sign and date it, and any changes or updates should be documented and agreed upon in writing.

The following topics shall appear in a Letter of Engagement:

1. Scope of Work: A detailed description of the services to be provided by the consultant or professional service provider.
2. Payment Terms: The payment structure, including the amount, method, and timing of payments.
3. Expectations: Clear articulation of the responsibilities and obligations of both the consultant and the client.
4. Confidentiality and Privacy: Provisions addressing confidentiality, privacy, and security measures to be followed during the engagement.
5. Dispute Resolution: Procedures for resolving any disputes that may arise during the engagement.

To be effective, a Letter of Engagement must be drafted in clear and unambiguous terms, avoiding any potential for misinterpretation. It should be signed and dated by both parties to acknowledge their agreement with the terms and conditions specified.
Any changes or updates should be documented and agreed upon in writing.