When Good Mergers Go Bad : Controlling Corporate Managers Who Suffer a Change of Heart

This article examines the tension between corporate fiduciary duties and traditional contract doctrine that arises when corporate managers agree to a merger and then suffer a change of heart. Specifically, it uses the Delaware case of IBP, Inc. v. Tyson Foods, Inc, to demonstrate how the obligations imposed on corporate managers by corporate law doctrine and by contract law doctrine may conflict in the merger context. In that context, a seller seeking to avoid a binding merger agreement must either honor their commitment or pay the price of their breach under contract doctrine, while corporate law doctrine may demand that directors simply dishonor the merger agreement. The article argues that traditionally, contract doctrine is given short shrift in the corporate context and suggests that Tyson shows that this is neither necessary nor desirable