LOI as a Source or Promoter of Undue Litigation _ Aside from the legal problem of the ambiguity and uncertainty inherent in LOI, there is yet another major problem inherent in the document, from a legal standpoint. Namely, precisely because the LOI is basically ambiguous and non_definitive by nature, the document often easily lends itself to different interpretations and understandings at the hands of different parties (or even the courts), and thus lends itself, in turn, to being a fertile source for undue litigation and legal contests for those involved with the use of that document in their transactions.
"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?