Building contractors in Yorkshire are being warned against trusting letters of intent.
According to the Sheffield Telegraph, the city's office of DLA Piper has suggested that such letters are not likely to be a sufficient guarantee of payment.
With insolvencies and administrations on the rise, those in the industry are being told to be wary.
Julie Morrisey, partner in the construction team at the Sheffield office of DLA Piper, claimed that it is important for contractors to understand the supply chain.
"It will become increasingly tempting for contractors to dive into any work which they are approached to do straight away," she said.
"But contractors need to think twice before beginning work on new projects on the back of an employer's letter of intent."
In the first quarter of 2009 there was a 140 per cent increase in receiverships in the construction industry, while receiverships saw an 87 per cent rise.
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