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Traders are better off NOT using documents like LOI, ICPO, FCO, etc. Even if and when they rarely are used in internal trades, on a restricted level within specific industries, they have no legal or customary basis in International Trade whatsoever. In fact the presence of many of these terms are considered to be signs of Advance Fee Fraud, by knowledgeable players and law enforcement.

While this document is not legally binding, the LOI is an important part of a purchasing process because it typically means that both parties have fundamentally agreed on a purchase price, basic terms of the deal and have agreed to negotiate exclusively with each other.

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