## Facts

- I.M.A., Inc., a small Colorado airline, held a Colorado Public Utilities Commission certificate authorizing service on the Denver–Durango route.
- By 1978, I.M.A. experienced severe financial distress and ceased operations without regulatory approval.
- While I.M.A. was negotiating with another carrier for a takeover, Rocky Mountain Airways sought to acquire I.M.A. to obtain access to I.M.A.’s route authority and related benefits.
- On August 1, 1978, the parties signed a “Letter of Intent and Agreement” drafted by Rocky Mountain, stating it was to confirm their understandings regarding Rocky Mountain’s acquisition of I.M.A.’s assets through purchase of all outstanding stock.
- The letter specified core terms: Rocky Mountain would assume I.M.A.’s liabilities and pay a $3 per-passenger fee for passengers boarding at Durango on the Denver–Durango route, credited to I.M.A.’s shareholders.
- The letter also contemplated additional steps, including regulatory approvals and preparation of further documentation.
- After signing, I.M.A. claimed Rocky Mountain acted as though it had obtained benefits tied to I.M.A.’s certificate/market position, but refused to complete the stock acquisition, assume liabilities, or pay the promised fees.
- I.M.A. sued for breach of contract, deceit, and unjust enrichment; the trial court directed a verdict for Rocky Mountain on deceit, and the jury returned a $300,000 general verdict for I.M.A. on the remaining claims.

## Issues

1. Whether the “Letter of Intent and Agreement,” together with surrounding circumstances, permitted a reasonable finding that the parties formed a binding contract rather than a nonbinding agreement to agree.
2. Whether the appellate court erred by deciding contract formation as a matter of law instead of deferring to the jury where the writing and evidence supported competing inferences about intent.

## Decision

- The Colorado Supreme Court reversed the court of appeals and remanded with directions to reinstate the district court’s judgment on the jury’s $300,000 verdict.
- The Court held that the evidence was sufficient for the jury to find the parties intended to be bound by the letter notwithstanding anticipated later documentation and regulatory steps.
- The Court held that, given ambiguity in the writing and conflicting evidence on intent, contract formation was properly treated as a fact question for the jury.
- Because the contract claim was properly submitted and supported, the general verdict stood without requiring separation of the contract and unjust-enrichment theories.

## Legal Principles

- A preliminary writing labeled a “letter of intent” may constitute an enforceable contract if the parties intended it to be binding.
- The mere expectation of later, more formal documentation does not, by itself, negate present contractual intent.
- When contract language is ambiguous or evidence of intent is conflicting, whether a contract exists is ordinarily a question for the trier of fact.
- On appellate review of a jury verdict, the evidence must be viewed in the light most favorable to the prevailing party; a court may reject contract formation as a matter of law only when no reasonable inference supports intent to be bound.

## Conclusion

The Colorado Supreme Court reinstated the jury’s verdict, holding that the parties’ letter of intent, containing essential deal terms and supported by contextual and post-signing evidence, could reasonably be found to reflect a binding agreement, and that the appellate court improperly displaced the jury’s role in resolving intent.


I.M.A., Inc. v. Rocky Mountain Airways, Inc., 713 P.2d 882 (Colo. 1986)