Law & Business | Professor Bainbridge

What’s NY and NC Law on No Shops in Letters of Intent?

Wachovia and Citi had a pretty strong no shop clause in their so-called ”exclusivity agreement,” which calls for NY law to be applied, and includes a specific performance clause. There is no fiduciary out. Assuming NY law applies, is this provision legal?

Update: Presumably despite the NY choice of law provision, state of incorporation fiduciary duty law would be relevant to issues such as the necessity of a fiduciary out. Wachovia is a North Carolina corporation. is there NC law on point?

Posted on Friday, October 03 2008 | Permalink

No idea if it’s enforceable in NY, but what would be specific performance in this case? Force Wachovia to send Citi deal to shareholder vote? The cat appears to be out of the bag - WF is offering a better deal.

Posted by on 10/03 at 02:39 PM

In my experience, there’s hardly ever corporate law on point other than in Delaware. It’s one of the reasons I get really annoyed when I have to research non-Delaware corporate law. It always seems like you end up stuck with nothing more than an obscure 1 paragraph reference to the issue in an intermediate appellate court case from the 1950s. Then you look over at Delaware and see three scholarly opinions on point in the last 15 years and you wonder why people incorporate anywhere else.

Posted by on 10/04 at 12:40 AM

Is the reference to New york law in the “exclusivity agreement” a reference to New yorks choice of law rule or to its corporate law? Incidentally New york statute require the application of New york law to any agreement where the parties have so specifiedw

Posted by on 10/04 at 03:32 PM

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