In August 2004, Graham Allen mentioned to his friend and
neighbour, Kim Wallace, that he was interested in selling his
business. Wallace in turn expressed interest in purchasing the
business. The two of them discussed and negotiated for weeks and,
finally, after Allen refused to sign two earlier versions that
"left too much up in the air", the two of them signed a
letter of intent (LOI) for the share purchase and
sale of four companies of which Allen was a major shareholder. The
parties were to reach a final share purchase agreement at a later
date.
Four months later, after Wallace missed a closing meeting with
Allen's knowledge and approval, Allen declared that the
transaction was at an end and refused to close the deal. Wallace
sued for breach of the LOI.
At trial, the judge held that the LOI was not a binding
agreement. However,
on appeal, the Ontario Court of Appeal overturned the decision
and held that the LOI was a binding agreement that Allen had
breached
