HOW VALID, OR OTHERWISE, ARE THESE USUAL RATIONALE BY SELLERS OR THEIR AGENTS? Ironically, while oil sellers and their agents frequently demand that prospective "serious" buyers involved in crude oil transactions should first offer an LOI, the buyers, on the other hand, are not generally enamored of that idea. Especially when, in effect, what is being asked of them is to provide the LOI upfront to a little_known Internet_generated seller about whom they lack any familiarity with or whose bona fides as sellers they know next to nothing about _ other than, perhaps, that they (the buyers) had had some initial communication with the "seller" via an Internet contact. In deed, to this writer's knowledge, crude buyers, particularly the more established and prominent ones, would very rarely offer an LOI upfront to any sellers to initiate a purchase. And when, especially, the supposed "seller" that's involved is one that is a virtual unknown to the buyer, or one that is merely an Internet_generated seller about whose bona fides and credentials the buyer knows practically next to nothing, one can be almost absolutely certain that the chances of a crude buyer of substance signing over an LOI to such a seller, is practically next to zero.
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.