Maria Bocharova
Specific Performance in Acquisitions:
When Monetary Damages Are Not Enough
The rule of thumb in contract remedies is injured party is only entitled to the economic expectation or its equivalent. It is not entitled to the actual performance of the contract. That is why, usually, drafting the provisions regarding the breach of the contract, an attorney will be most focused on the monetary damages as the standard and the most commonly used type of the remedies. Monetary damages are generally awarded as a sum of money equal to the loss in value to the injured party of the other party’s failed or deficient performance, plus any other loss caused by the breach .
However, sometimes non-monetary remedies, such as specific performance,
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For example, in Triple-A Baseball Club Assocs. v. Ne. Baseball, Inc., 832 F.2d 214, 223-24 (1st Cir. 1987) specific performance awarded because baseball franchise was a unique business; in Rand-Whitney Packaging Corp. v. Robertson Group, Inc., 651 F. Supp. 520, 538 (D. Mass. 1986) specific performance possible where business assets “present a unique opportunity”; in Wooster Republican Printing Co. v. Channel 17, Inc., 533 F. Supp. 601, 621 (W.D. Mo. 1981) specific performance of a contract to sell “unique” television station; in True North Comm’ns, Inc. v. Publicis, S.A., 711 A.2d 34, 37, 44-45 (Del. Ch. 1997), aff’d, 705 A.2d 244 (Del. 1997) awarding specific performance where “international communications company with advertising and public relations agencies…around the world” was “a unique acquisition opportunity”. In other words, in order to assure that specific performance clause is enforceable, it is important to incorporate in the loan agreement the purpose of lending money: acquisition of a “unique asset”. Additionally, the detail description of all the characteristics that make the target company so “unique” in the market, would be very supportive in order to be awarded specific …show more content…
In BT Triple Crown Merger Co. v. Citigroup Global Mkts., Inc., (Sup. Ct. N.Y. County May 7, 2008) “The court would have to weigh the accuracy and credibility of competing fact and expert witnesses trying to estimate the difference in value between the loan package promised by the banks and what a hypothetical alternative financer…might theoretically charge for the similar service – a necessarily complex exercise.” Additionally, the court should also find the way to estimate in monetary amount the lost profits from the acquisition banks refused to finance. In these circumstances, court found that specific performance would “do more perfect and complete justice .” The same decision was granted by the court in Girard Bank v. John Hancock Mut. Life Ins. Co., 524 F. Supp. 884, 896 (E.D. Pa. 1981), aff’d, 688 F.2d 820 (3d Cir. 1982), where specific performance was awarded to the plaintiff because the calculation of damages in the lending arrangement would be “complex and
1) General Rule – Contract damages should put the π in as good of a position as if the contract was fulfilled.
2. Due to the circumstances of the contract (that it be for sale of land) specific performance will be awarded.
When a business breaches a contract, serious consequences can occur resulting in damages and losses. An expected service or agreement that is not complied with impacts everyone involved. A breach of contract can reduce earnings while also potentially harming future profits. It also puts a company’s value at risk if it cannot satisfy demands for products or meet deadlines. Often, monetary damages result from breach of contract claims. Claims are most often made by party who met its requirements against the party it alleges has not. Damages involved are typically lost revenues, sales impacts involve claims for lost value, and added costs resulting from the breach. Damages estimates are made using historical information and projections to support a plaintiff’s claim
Have you ever been done wrong? Have you ever been done wrong under a contract and faced sufficient damages causing a loss? Chapter 18 focuses on contract remedies, and how damages to a party are compensated. When a party breaches a contract, under the law the court can give the injured party an equivalent of what the promised performance would have rewarded. The two cases I chose to discuss are the Arrowhead School District No. 75, Park County, Montana v. James A. Klyap, Jr. case and the Parker v. Twentieth Century-Fox Film Corp. case. Both of these cases provide us with a very good explanation of different types of damages, and how the court came to a conclusion based off of the different scenarios. Throughout the remainder of this article, it will briefly discuss the details of each case, the similarities and differences among them, and how your business clients can use these cases to strategically prevent future legal issues of similar nature.
There are four remedies for breach of contract under UCC Article 2. Categorized as remedies of law; the first is compensatory damages, which cover direct losses and costs. Compensatory damages are an attempt to put the non-breaching party in the same position it would have been had they not suffered the breach. Second are consequential damages, which are to cover indirect and foreseeable losses not covered by compensatory damages. Third is restitution to prevent the unjust enrichment of one party in the agreement. Fourth, liquidated damages are provisions agreed to by the parties when drawing up the contract in the event of a default or breach of contract by either party (Melvin, 2011).
Specific performance is permitted when the buyer reasonably relied on the contract with the seller and the buyer’s position has changed for the worse.
See, e.g., U.S. v. Gordon, 08-21103-Jordan (S.D. Fla. 2008) (bank’s managing director altered individual’s credit data to inflate mortgage pools’ apparent quality and value upon sale to investors); U.S. v. Levine, 1:09-CR-00554 (N.D. Ga. 2009) (executive vice president in charge of bank’s community redevelopment lending department accused of knowingly over-valuing bank assets (loans to flippers) in reports to the OCC and the FDIC; the defendant is expected to plead guilty in January, 2010).. 17 See, e.g., U.S. v. Sailor, 1:08-CR-105, superseding information (N.D. Ga. 2008). 18 See, e.g., U.S. v. Sprouts, 2:08-CR-0051 (W. D. Pa. 2008). 19 See, e.g., U.S. v.
United States, the courts look at whether there was an identity of interest between creditors and shareholders and the timing of the advances during the corporation’s organization. They test for a debtor-creditor relationship based off a enforceable obligation to pay a fixed amount of money. They look at the motivation of the taxpayer to see if the advances were made for ulterior tax purposes. If repayment was contingent upon the success of the company advances were made toward, it would be more than likely considered equity than loans. This case also adds that because no promises were made to repay at a fixed interest rate or certain time, and did not pay interest and gave no security for the advances made, the case sees the taxpayers as the sole shareholders gaining equity in the
In exclusive contracting, facilities still look at the same economic factors but award contracts to individuals or groups of people based on the expected revenues and
Required 4. Prepare the General Journal entry to record the purchase of this business assuming Phuong is able to make an offer of $140,000. Make sure you show all relevant calculations. 5. Discuss if you believe Phuong has received a good deal if his offer of $130,000 is accepted and why Phuong would be willing to pay the company more than the carrying amount of assets in question. 6. Discuss how your entries would have changed for part 2 if Phuong had paid $110,000 for the various assets he wishes to acquire in order to make sure his was the highest bidder.
Target Corporation is a well-known American discount retailing company, founded in 1902 and is headquartered in Minneapolis, Minnesota. It is the second-largest discount retailer in the U.S. (Walmart being the largest) (Target, 2014). Target’s analysis will provide an insight into the corporation and its working. It look at and evaluate it in terms of terms of its effectiveness in each of these areas, such as: the structure, goals, agendas, boundaries, control, culture, politics, and decision-making processes. Based on the evaluation, this paper will help to provide suggestions for improvements within the different areas, if the need arises.
This case was prepared by Professor Stephen E. Barndt of Pacific Lutheran University. This case was edited for 5MBP 9th Edition. Copyright C 1998 and 2000 by Stephen E. Barndt. This case was published in the Business Case [ourn Summer 1998. Vol. 1. No. t. pp. 53-{}9. Reprinted hy permission,
In the first round of competition, there are 17 banks competing to propose a mandate for syndication. How should Chase make the proposal to Disney depend on the following respects: (1) Disney’s requests (2) Evaluation of the returns and risks. Based on the previous two parts, design the
"(i ) n contract, damages are awarded with the object of placing the plaintiff in the position in which he would have been had the contract been performed - he is entitled to damages for loss of bargain (expectation loss) and damage suffered, including expenditure incurred, in reliance on the contract (reliance
There is relatively little evidence on impact of internal control on mergers and acquisitions (M&A). This paper examine the relationship between internal control quality and M&A performance. Specially, this paper takes a look whether or not internal control impact differently on the performance of three types of M&A: horizontal mergers, vertical mergers and conglomerate mergers. The Sarbanes-Oxley Act of 2002 (SOX), also known as the Public Company Accounting Reform and Investor Protection Act and Corporate and Auditing Accountability and Responsibility Act, is a United States federal law that was pass setting forth a requirement that a large majority of publically traded firms had to periodically disclose information regarding their internal control environments.