What do you call a guy who gives you a non-binding letter of intent to buy your company for $15.5 million, waits a few months before giving you another non-binding letter, and then sues you when you sign a binding contract to sell your company for $30.5 million? In Nebraska, he’s called Kelly Conolly.
Conolly worked as a terminal manager for Clark Brothers Transfer, a trucking company based in Nebraska. James Clark was the company's president and majority shareholder. In early 2003, Conolly began talking with Clark about buying the company. After months of negotiating, they executed a confidentiality agreement on October 17, 2003, which gave Conolly financial information about the company. Clark asked Conolly to give him a written purchase offer in 2 weeks. Conolly sent another non-binding letter of intent without a purchase offer. The letter also left the purchase price open.
Clark and Conolly met the next day, orally agreed on a purchase price of $15.5 million, shook hands and left all the other terms open. Clark asked for a firm purchase offer within two weeks. Six weeks later, Conolly's attorney sent a letter saying Conolly was interested in purchasing the company "pursuant to the terms contained in this non-binding letter of intent." The letter named a price but reiterated that it was not a binding commitment by either party. Conolly sent Clark an email stating, "of course this is just preliminary and a formal proposal will be forthcoming once we reach an agreement." Six weeks later, Clark sold the company to another buyer for $30.5 million.
Conolly argued that the parties had a contract when they agreed on the price and shook hands. The United States Court of Appeals for the Eighth Circuit held that that the terms of the oral agreement were not “sufficiently definite to demonstrate an objective intent to be bound” at the time the parties shook hands. The parties were still negotiating many basic terms.
Wikipedia says that chutzpa is the quality of audacity, for good or for bad. That may be the right word.
