Wisconsin Business Law Blog : Waukesha, New Berlin, Oconomowoc Corporate & Real Estate Lawyer & Attorney

The court battle between IBM and Dell over the employment of former IBM M&A chief David Johnson provides even more evidence that Noncompete Agreements are highly unique contracts that often lead to some highly unique arguments in litgation. It appears Mr. Johnson is arguing that because he “intentionally” signed the noncompete on the wrong line, it is not valid.  In other types of transactions (and maybe this one too) this type of admission would most likely lead to a misrepresentation, fraudulent inducement, or similar common law claim that could open up a party to significant liability.

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The current dispute involving the University of Kentucky and its former men's basketball coach, Billy Gillispie, is an example of a not so uncommon problem with informal agreements. In general, “agreements to agree” (aka “letters of intent” or “agreements in principle) are not binding contracts under Wisconsin law. Instead, they are tools used to clarify significant points of a transaction in order to more easily draft the “final” documents. Unfortunately, the “final” documents are not always drafted and signed. As in the Gillispie situation, this often leads to one side of the transaction arguing that the letter of intent was actually a binding contract. A good practice is to make it absolutely clear in any letter of intent that it is not binding and then, of course, to formalize any agreement in a definitive document or clearly terminate the letter of intent with some type of writing.

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