Mega Corp (“Mega”) and Galactic Industries (“Galactic”) have been engaged in protracted negotiations for the sale of Galactic’s Hyper-Space division to Mega.
Mega Corp (“Mega”) and Galactic Industries (“Galactic”) have been engaged in protracted negotiations for the sale of Galactic’s Hyper-Space division to Mega. After months of negotiations, the parties made a deal and the lawyers reduced the terms to writing on May 10th. Article 72(f) of the final contract says:
Entire Agreement. This Agreement, together with its related Exhibits and Schedules, constitutes the sole and entire agreement of the Parties with respect to the subject matter of this Agreement, and supersedes all prior and contemporaneous understandings, agreements, representations, and warranties, both written and oral, with respect to the subject matter.
The deal is scheduled to close five days after receipt of all regulatory approvals. On December 1st, the final approval required from NASA was received. On December 2nd, Mega’s CEO called Galactic’s CEO and advised her that Mega might not be able to close the deal on-time due to changes in the financial markets making it difficult to finance the deal. Mega said they could close if Galactic would agree to provide $1 billion of bridge financing for 18 months at the prime rate.
Galactic’s CEO called an emergency meeting of the Board of Directors who approved the bridge financing. She called back Mega’s CEO the same afternoon and committed to provide the bridge financing and said they are prepared to close immediately.
Finally, on December 4th, the parties met for the closing whereupon Galactic’s CEO said, “due to further deterioration of the financial markets, we are not going to provide the bridge financing and you’ll need to close now on the original terms or we will sue for breach.” Mega was unable to close without the bridge financing.
Based on all of the facts above, the most likely outcome of a lawsuit for breach of contract would be:
Group of answer choices
Galactic will win because Article 72(f) requires any change in terms to be in writing
Galactic will win because the agreement to provide bridge financing was not in writing and will be inadmissible due to the parol evidence rule
Mega will win because Galactic’s waiting until the closing meeting to disavow the bridge financing was an unfair surprise
Mega will win because the oral agreement to provide bridge financing became a part of the contract between the partie
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