Venture Associates Corp. v. Zenith Data Systems Corp.

Venture Associates Corporation (Venture) (plaintiff) sent Zenith Data Systems Corporation (Zenith) (defendant) a letter of intent proposing to buy Zenith's subsidiary Heath Company for $11 million, stating the only binding obligation was to negotiate in good faith toward a purchase agreement; Zenith agreed in principle. After six months of negotiation, Zenith ended talks because Venture refused to provide a third-party guaranty of its financial obligations or agree to a post-closing purchase-price adjustment. Venture sued; the district court initially dismissed, but on Venture's appeal, the court of appeals found the letters created a binding agreement to negotiate in good faith (though not a final contract via the non-identical drafts theory), and remanded. On remand, the district court found Zenith hadn't acted in bad faith and awarded no damages; Venture appealed again.