## Facts

- Weigel Broadcasting Co., an Illinois broadcaster, pursued acquisition of TV-49, Inc.’s television station through a stock purchase.
- On May 18, 2005, Weigel offered $5 million to buy all TV-49 stock, conditioned on items including FCC approval, a definitive agreement, and exclusivity; the offer expired unaccepted.
- In July 2005, the parties executed a revised “non-binding Letter of Intent” (LOI) contemplating a $7 million stock purchase.
- The LOI stated the contemplated sale terms were “non-binding” and anticipated negotiation and execution of a definitive Stock Purchase Agreement (SPA) within 40 days.
- The LOI included an exclusivity clause requiring TV-49 to cease negotiations with other potential buyers during the 40-day period.
- During the 40-day period (ending about August 23, 2005), Weigel sought documents for due diligence; Weigel claimed TV-49 did not provide requested materials.
- Weigel sent a draft SPA shortly before the 40-day deadline; TV-49 responded only after the period lapsed, and the parties continued to disagree over deal terms.
- On October 4, 2005, TV-49 informed Weigel it would not accept certain demanded conditions and had begun negotiations with another buyer (Entravision), later signing a letter of intent with Entravision.
- Weigel sued for breach of contract, seeking specific performance or an injunction to prevent sale to others, or alternatively damages; TV-49 removed on diversity and moved for summary judgment, arguing the LOI imposed no enforceable obligations.

## Issues

1. Whether the LOI created an enforceable contract to sell the station (supporting specific performance or an injunction compelling consummation of the transaction).
2. Whether the LOI nonetheless created an enforceable obligation to negotiate exclusively and in good faith during the 40-day period, and whether a triable breach existed.

## Decision

- Summary judgment was granted for TV-49 to the extent Weigel sought to treat the LOI as a binding contract of sale and obtain specific performance or similar equitable relief compelling a sale.
- Summary judgment was denied on the claim that the LOI imposed a limited, enforceable duty to negotiate exclusively and in good faith during the specified 40-day period, because material factual disputes existed as to breach within that timeframe.
- The court held that any exclusivity/good-faith negotiation obligation, if enforceable, was limited to the 40-day period set out in the LOI.

## Legal Principles

- Express “non-binding” language in a letter of intent, coupled with contemplation of a later definitive agreement and absence of essential transaction terms, weighs strongly against finding a binding contract to consummate a sale.
- A preliminary agreement may be nonbinding as to the ultimate transaction while still binding as to discrete ancillary commitments (including exclusivity provisions) when the text and context support that reading.
- An exclusivity promise for a defined period can support an implied duty to negotiate exclusively and in good faith during that period, even if neither party is obligated to reach a final contract.
- Specific performance requires a definite, enforceable contract with sufficiently clear material terms; a nonbinding LOI lacking essential terms will not support an order compelling the sale.
- Where alleged breach of exclusivity or good-faith negotiation turns on contested conduct and timing during the agreed period, summary judgment is generally inappropriate.

## Conclusion

The court ruled that the parties’ LOI did not obligate TV-49 to sell the station or justify specific performance, but it could impose a limited, time-bound obligation to negotiate exclusively and in good faith, leaving disputed facts for trial on whether TV-49 breached that obligation during the 40-day exclusivity window.


Weigel Broad. Co. v. TV-49, Inc., 466 F. Supp. 2d 1011 (N.D. Ill. 2006)