Itek Corp. v. Chicago Aerial Indus., Inc.
Delaware Supreme Court
248 A.2d 625 (1968)
Itek Corp. (plaintiff) negotiated to acquire Chicago Aerial Industries' (CAI) (defendant) assets, and after CAI conditionally accepted Itek's offer subject to financing and a formal agreement, the companies signed a letter of intent in January 1965 stating they would make "every reasonable effort" to prepare a formal purchase contract quickly, while also noting neither party would be further obligated if no such contract was executed. Before a formal contract was finalized, CAI's shareholders accepted a higher competing offer from another company and ended negotiations with Itek, prompting Itek to sue CAI and its individual shareholders for breach of contract and failure to negotiate in good faith; the trial court granted summary judgment to both CAI and its shareholders.
Whether an enforceable contract comes into being during the preliminary stages of negotiations, or whether its binding effect must await a formal agreement, depends on the intention of the parties.