Delaware Business Litigation Report

Superior Court Denies Defendant's Motion for Summary Judgment in Breach of Asset Purchase Agreement Case

MerchantWired, LLC v. Transaction Network Services, Inc., 02C-08-244 FS, 2005 WL 468241 (Del. Super. Ct. Feb. 28, 2005). The plaintiff brought a breach of contract action against the defendant when the defendant refused to close on the purchase of the plaintiff's business. The defendant moved for summary judgment, claiming that the plaintiff failed to meet two pre-closing conditions. Rejecting this argument, the court denied the defendant's motion for summary judgment. Transaction Network Services, Inc. ("TNS") agreed to purchase MerchantWired from MerchantWired's founders. Despite the agreement, TNS refused to close. TNS claimed that MerchantWired failed to meet certain pre-closing conditions. Under the first pre-closing condition, the parties had to sign the Investors Rights Agreement. TNS refused to sign the Investors Rights Agreement because its lenders had a problem with it. The second condition was that MerchantWired had to eliminate its credit card processing business before closing. As to the first condition, the court noted that the Investors Rights Agreement was attached as an exhibit to the Purchase Agreement, a document the parties did sign. The court found that the Investors Rights Agreement was incorporated into the Purchase Agreement by reference. Accordingly, by agreeing to the Purchase Agreement, the parties were also agreeing to the Investors Rights Agreement. As to the second condition, based on the facts, it appeared to the court that MerchantWired's sale of its credit card business would not be concluded by the closing date. However, because there was an issue as to whether TNS had extended the closing deadline and temporarily waived the portion of the Purchase Agreement requiring that the credit card business be sold, the court refused to grant TNS's motion for summary judgment. Authored by: Jason C. Jowers 302-888-6860 jjowers@morrisjames.com Share