Teachers Insurance and Annuity Association of America v. Tribune Co.
United States District Court for the Southern District of New York
670 F. Supp. 491 (1987)
Teachers Insurance and Annuity Association of America (Teachers) (plaintiff) sued Tribune Co. (Tribune) (defendant) for breach of a commitment letter under which Tribune agreed to take a loan from Teachers, subject to final documentation and board approval. Tribune later wanted to use offset accounting to keep certain liabilities off its balance sheet ahead of a public stock offering, and when it learned the SEC would likely reject that accounting treatment, it broke off negotiations -- even though the commitment letter never mentioned offset accounting as a condition of the deal.
Whether a preliminary commitment letter that leaves some terms open and contemplates a later final agreement is nonetheless binding on the parties.