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lwpat, Attorney
Category: Business Law
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Experience:  Attorney with over 35 years of business experience.
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Discuss the reasoning of the court in the case of Itek Corp.

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Discuss the reasoning of the court in the case of Itek Corp. v. Chicago Aerial Industries, Inc. (1968)


Facts: After long negotiations, a letter of intent between P. and D. was
signed which stated in part that they would both "make every reasonable
effort to agree upon and have prepared as quickly as possible" a
contract for the purchase of P. to buy D.. Soon thereafter, D. was
offered a higher price by a separate company, and so terminated the
contract based on "unforeseeable circumstances". P. sued, and lost by
summary judgment at trial court, and appealed.

Nature of the Risk: When parties enter a contract, they assume the risk
that a better opportunity will present itself, which they cannot take
advantage of due to the nature of their previous contract.

Issue: Was there a binding contract between P. and D.?

Holding: "...the fact that some matters are left for future agreement
among the parties does not necessarily preclude the finding that a
binding agreement was entered into during the preliminary stages."

Reasoning: The court based their holding on Borg, and reasoned that the
attempt parties did not try to reach agreement in good faith as they had
promised. In essence, they had contracted to negotiate further terms.
They used the Illinois law focusing on intent of the parties to say that
there was evidence that would support a finding that both parties
intended to be bound.

Basically this case is saying that there is a duty of good faith and fair dealing in all contracts. Here the seller had the burden of showing it acted in good faith and not jsut because it received a better offer.

lwpat and 3 other Business Law Specialists are ready to help you
Customer: replied 7 years ago.

I have another question for you. If that is ok. It is about something different.

Debate the correctness of the decision of the court in the case of Davis v. General Foods Corp. (1937)



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