Jones Brothers Construction was the general contractor on a job to expand American Airlines facilities at O’Hare International Airport. Jones Brothers invited Quake Construction to bid on the employee facilities and automotive maintenance shop (“the project”). After Quake bid, Jones Brothers orally informed Quake that it was awarding Quake the project and would soon forward a contract. Jones Brothers wanted the license numbers of the subcontractors that Quake would be using, but Quake could not furnish those numbers until it had assured its subcontractors that they had the job. Quake did not want to give that assurance until it was certain of its own work. So Jones Brothers sent a letter of intent that stated, among other things:

We have elected to award the contract for the subject project to your firm as we discussed on April 15. A contract agreement outlining the detailed terms and conditions is being prepared and will be available for your signature shortly.

Your scope of work includes the complete installation of expanded lunchroom, restaurant and locker facilities for American Airlines employees as well as an expansion of American Airlines existing Automotive Maintenance Shop. A sixty (60) calendar day period shall be allowed for the construction of the locker room, lunchroom and restaurant area beginning the week of April 22. The entire project shall be completed by August 15.

Subject to negotiated modifications for exterior hollow metal doors and interior ceramic floor tile material as discussed, this notice of award authorizes the work set forth in the [attached] documents at a lump sum price of $1,060,568.00. 

Jones Brothers Construction Corporation reserves the right to cancel this letter of intent if the parties cannot agree on a fully executed subcontract agreement.

The parties never signed a more detailed written contract, and ultimately Jones Brothers hired another company. Quake sued, seeking to recover the money it spent in preparation and its loss of anticipated profit.

Questions:

1. Was the letter of intent a valid contract?

2. Was the letter of intent ambiguous? 

3. What language in the letter of intent suggests the parties have agreed to a contract?

4. What language in the letter of intent suggests the parties have NOT agreed to a contract?

5. Do you think the parties expected the work to begin BEFORE the final contract was issued? If so, why?