In sum, the rationale underlying the Seller's demand for LOI, can essentially be summed up as follows: 1) That giving an LOI to a seller by a prospective buyer, is an indication that the buyer is "serious" and willing to purchase; 2) That use of the LOI is the usual way of initiating a purchasing proposal by a buyer, and is the right and proper way to go; and 3) That there is nothing for anyone in the deal to lose by a prospective buyer signing an LOI.
"Parties to a transaction sometimes intentionally create a letter of intent as an expression of what they intend to agree upon should certain circumstances arise... [whatever happens], the document will not be binding and thus not enforceable until those circumstances arise. Thus, the letter of intent is essentially a legally worthless document. It is not clear to me the reason any party would ever bother to create such a document and yet I have seen it used on many occasions. If parties to a transaction intend to bind each other, then they should create a binding contract, not a letter of intent. If the parties to a transaction do not intend to bind each other, then why bother creating a document that is not binding?