Empro Mfg. Co. v. Ball-Co Mfg., Inc. 870 F.2d 423 (7th Cir. 1989) Valve manufacturer Ball-Co was interested in selling some of its assets. Empro showed interest. After some negotiation, Empro sent Ball-Co a letter of intent to buy one of Ball-Co's plants for $2.4M. The letter of intent said that, "the general terms and conditions of such proposal will be subject to and incorporated in a formal, definitive Asset Purchase Agreement signed by both parties." Subsequent negotiations broke down and Ball-Co began negotiation with another buyer. Empro sued, arguing that Ball-Co had already agreed to sell the land to them, so they must be restrained from selling it to someone else. Ball-Co wanted security in case Empro didn't make their payments. Trial Court found that the words, "subject to the execution of an Asset Purchase Agreement" meant that the letter of intent was not a definitive contract and had no independent force. Empro argued that the binding effect of the letter of intent depends on the parties' intent and cannot be dismissed. Empro claimed that they intended the parties to be bound. The Appellate Court affirmed. The Appellate Court found that there could be cases where a letter of intent could constitute a binding agreement. But it would have to be very specifically worded as such. Letters of intent and agreements in principle often do no more than set the stage for negotiations on details. In this case, the Court used the objective theory, in which the actual intent of the parties has nothing to do with the contract, it's only what a reasonable person would think. Conversely, in the case of Billings v. Wilby, a letter of intent was considered binding, but in that case, there were a lot more details in the preliminary document.