A/S Apothekernes Laboratorium For SpecialPraeparater v. I.M.C. Chemical Group, Inc.

A/S Apothekernes Laboratorium For SpecialPraeparater (Lab) (plaintiff), through its president, Sissener, began negotiating in March 1977 with Gillis, president and chief executive officer of I.M.C. Chemical Group, Inc. (IMC) (defendant), for the purchase by Lab of the Biochemical division of IMC. On December 9, 1977, both parties signed a letter of intent that set forth the terms for future negotiations for the agreement of sale. The letter of intent contained a provision that the final agreement of sale would ultimately be subject to approval by the Boards of Directors of both Lab and IMC. Pending this approval, the letter of intent provided that IMC would not engage in negotiations with any other party for the sale of its assets. Finally, the letter of intent provided that the agreement of sale should be executed within 60 days of December 9, 1977. By February 24, 1978, Sissener and Gillis reached a meeting of the minds on all terms. This date was past the 60-day deadline provided for in the letter of intent, however, and no formal agreement of sale was drafted by this time. Before submitting the proposed agreement of sale to IMC’s Board of Directors for approval, Gillis took the proposed agreement to Lenon, president of IMC’s parent company. Lenon rejected the agreement of sale, and his decision was binding on IMC’s Board of Directors. Thus, IMC’s Board of Directors rejected the agreement of sale, and Gillis informed Sissener that IMC would not sell its assets to Lab as agreed. Lab brought suit in federal district court against IMC alleging breach of contract and violation of IMC’s implied duty to negotiate in good faith. The trial court entered judgment for IMC, and Lab appealed.