Empro Manufacturing Co., Inc. v. Ball–Co Manufacturing, Inc. case brief summary
870 F.2d 423
CASE SYNOPSIS:In an action for breach of letter of intent, plaintiff buyer appealed the decision from the United States District Court for the Northern District of Illinois, Eastern Division, that dismissed plaintiff's complaint against defendant seller for failure to state a claim on which relief may be granted under Fed. R. Civ. P. 12(b)(6).
OVERVIEW: Plaintiff buyer sued defendant seller claiming that a letter of intent to purchase defendant's assets signed by the parties obliged defendant to sell only to plaintiff. Plaintiff sought a temporary restraining order. The district judge dismissed the complaint under Fed. R. Civ. P. 12(b)(6) for failure to state a claim on which relief may be granted.
HOLDING:
The statement, appearing twice in the letter, that the agreement was "subject to" the execution of a definitive contract meant that the letter had no independent force.
ANALYSIS:
On appeal, the court affirmed. The court noted that plaintiff insulated itself from binding effect by listing, among the conditions to which the deal was "subject," the approval of plaintiff's shareholders and board of directors. Plaintiff even took care to require the return of its earnest money without set off, in the event the transaction was not closed, although the seller usually got to keep the earnest money if the buyer changed its mind. Neither the text nor the structure of the letter suggested that it was to be a one-sided commitment, an option in plaintiff's favor binding only defendant.
OUTCOME: The judgment was affirmed.
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870 F.2d 423
CASE SYNOPSIS:In an action for breach of letter of intent, plaintiff buyer appealed the decision from the United States District Court for the Northern District of Illinois, Eastern Division, that dismissed plaintiff's complaint against defendant seller for failure to state a claim on which relief may be granted under Fed. R. Civ. P. 12(b)(6).
OVERVIEW: Plaintiff buyer sued defendant seller claiming that a letter of intent to purchase defendant's assets signed by the parties obliged defendant to sell only to plaintiff. Plaintiff sought a temporary restraining order. The district judge dismissed the complaint under Fed. R. Civ. P. 12(b)(6) for failure to state a claim on which relief may be granted.
HOLDING:
The statement, appearing twice in the letter, that the agreement was "subject to" the execution of a definitive contract meant that the letter had no independent force.
ANALYSIS:
On appeal, the court affirmed. The court noted that plaintiff insulated itself from binding effect by listing, among the conditions to which the deal was "subject," the approval of plaintiff's shareholders and board of directors. Plaintiff even took care to require the return of its earnest money without set off, in the event the transaction was not closed, although the seller usually got to keep the earnest money if the buyer changed its mind. Neither the text nor the structure of the letter suggested that it was to be a one-sided commitment, an option in plaintiff's favor binding only defendant.
OUTCOME: The judgment was affirmed.
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Interested in learning how to get the top grades in your law school classes? Want to learn how to study smarter than your competition? Interested in transferring to a high ranked school?
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