"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?
Many newcomers to the world of international business are given confusing advice on the proper documents to use in their business. The Letter of intent / LOI is a document that many refer to, but actually is poorly understood. Without proper understanding of the document you might find yourself making mistakes in your business that will cause you great embarrassment.