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LOI is fraught with many legal booby traps & pitfalls especially for the buyer. But probably the most damning reason why credible crude buyers would have little or no use for LOI in their buying dealings, is that using the LOI is fraught with many incalculable legal traps and pitfalls much of which could atimes be very costly for, and to the detriment of, the buyer, according to legal authorities and contract law experts.

A famous example often cited by legal scholars, was a case involving the Getty Oil and Pennzoil in very early 1984. The parties had signed a "Memorandum of Agreement" _ viewed by the parties at the time as a Letter of Intent _ for a complex investment and stock transaction, whereby Pennzoil would purchase Getty Oil stock, and set forth general terms of the investment that had been reached in conversations, and also stipulated that the Memorandum was subject to the approval of the Board of Getty Oil. The Board of Getty Oil sooner approved the transaction and both parties announced on January 4, 1984 in a press release, an "agreement in principle" to the terms of the Memorandum. The final agreements for the merging of Texaco and Getty Oil were signed by the parties on January 6 _ 8.

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