The Key to an Effective Letter of Intent. A letter of intent, or LOI, is a document that outlines an agreement between two or more parties before the agreement is finalized. A Letter of Intent resembles a written contract, but generally are not binding upon the parties. The purpose of an Letter of Intent may be to clarify the key points of a complex transaction for the convenience of the parties, to declare officially that the parties are currently negotiating, as in a merger or joint venture proposal, or to provide safeguards in case a deal collapses during negotiation
The long and short of the story, is that the court, after scrutinizing not only the Memorandum, but also the wordings of the press releases and other documents that Getty Oil and Pennzoil had issued over the course of their dealings, found Getty Oil to be "in breach" of the Memorandum of Agreement _ the document the parties had viewed as a letter of intent.