Diesel Power Equipment, Inc. v. ADDCO, Inc.
United States Court of Appeals for the Eighth District
377 F.3d 853 (2004)
Diesel Power (plaintiff) and ADDCO (defendant) negotiated through three successive letters of intent and then two draft Asset Purchase Agreements over the sale of ADDCO's Nicholson division, but the final draft APA added a $50,000 noncompete agreement, eliminated any allocation to goodwill (a term the letter of intent had addressed), revalued inventory differently, and added a new contingency requiring third-party Deutz's consent; neither APA was ever signed, and after a competing buyer offered nearly $1 million more, ADDCO sold Nicholson to that buyer instead, prompting Diesel Power's breach-of-contract suit based on the letter of intent, which the district court found to be a binding agreement.
Whether an informal agreement is binding if a later, formal agreement materially alters the terms of the informal agreement.