THE SELLERS' RATIONALE FOR DEMANDING THE LOI. This position expressed by one representative of a seller, a Swedish_based broker, in a recent exchange with this writer's office regarding the seller's offer wherein the prospective buyer's mandate resisted the broker's insistence that the prospective buyer must first sign an LOI, pretty much sums up the traditional rationale offered by sellers and/or their agents for having an LOI: "Buyer who is serious, ready and able to purchase [crude oil], will sign [an] LOI and all the necessary documents that protect the rights of the Brokers and proceed. There is nothing to lose in signing those documents. This is how it is usually done and this is how it should be."
In the majority of cases, a separate NDA (aka confidentiality agreement [CA]) will have been executed between the parties during the initial discussion stage, prior to the drafting of a LOI. An NDA imposes binding obligations of confidentiality that will survive the non_binding letter of intent.