A letter of understanding is basically a document that reaffirms the issues discussed in a meeting or the oral agreements made in a previous 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.
Sample letter of understanding
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!