Itek Corp. v. Chicago Aerial Indus., Inc.

248 A.2d 625 (De. 1968)

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Nature of the Case

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Facts

Itek (P) wanted to purchase the assets of CAI (D). There was a conditional acceptance of a deal, and the agreement of D's principal stockholders was reached with an agreement to recommend approval to D's board and other stockholders. D's board approved the deal subject to four conditions; P obtain necessary financing, an informal letter of intent be executed, the detail to be worked out, and formal documents be prepared in satisfaction of the parties. P arranged financing, and a letter of intent was drafted and signed. Problems with tax liabilities prevented an immediate consummation of the formal agreement. D then revived negotiation with Bourn to purchase the largest stockholders shares at a higher price. P and D met, and P agreed to new conditions insisted upon by D. D then met with Bourns who was told that the P-D negotiations had reached an impasse. Bourns mailed an offer and D's largest shareholders agreed to sell their stock to Bourn. P was informed that the transaction was terminated. P sued claiming that D willfully refused to negotiate in good faith. The trial court determined that the failure to execute a formal contract absolved the parties from further negotiation and granted a summary judgment. P appealed.