Exclusivity Alone Does Not Create a Type II Preliminary Agreement: A Commentary on 37celsius Capital Partners, L.P. v. Intel Corporation

I. Introduction

This Seventh Circuit decision, 37celsius Capital Partners, L.P. v. Intel Corporation, concerns a failed acquisition of an Intel subsidiary, Care Innovations, LLC (“Care”), by 37celsius, a Milwaukee-based healthcare-focused investment firm. The parties signed both a non-disclosure agreement (“NDA”) and a detailed term sheet governed by Delaware law, contemplated a $12 million cash contribution by 37celsius, and included an exclusivity provision in favor of 37celsius.

The deal never closed because 37celsius failed to secure the agreed-upon $12 million by the contractual closing date. Intel then sold Care to another buyer. Years later, 37celsius sued Intel for breach of contract, asserting that Intel violated an exclusivity provision and that the term sheet constituted a binding “Type II” preliminary agreement obligating Intel to negotiate in good faith and thereby entitling 37celsius to expectation damages for the lost acquisition.

The Seventh Circuit, applying Delaware law, affirmed summary judgment for Intel. Judge Kolar, writing for a unanimous panel, held that:

  • The term sheet was not a Type II preliminary agreement imposing a duty to negotiate in good faith toward a final deal.
  • Even assuming a Type II agreement and a breach of exclusivity, 37celsius failed to show that Intel’s breach was the but-for cause of the deal’s failure.
  • The NDA barred recovery of expectation damages (including lost profits and deal value), and 37celsius did not preserve any challenge to the district court’s denial of reliance damages.

The opinion thus clarifies key points at the intersection of Delaware contract law and transactional practice:

  1. An exclusivity provision, standing alone, does not transform a non-binding term sheet into a binding Type II agreement.
  2. Under Delaware’s SIGA framework, a party seeking expectation damages for breach of a Type II agreement must prove that, but for the breach, the deal would have closed on substantially the agreed framework.
  3. Broad NDA “hold harmless” and damages waivers are enforceable and can independently defeat a damages claim arising from failed negotiations.

II. Summary of the Opinion

A. Factual Background

Intel decided to explore a sale of Care Innovations. 37celsius, led by principal Alexander Kempe, emerged as a serious potential buyer. The parties first entered into an NDA, which:

  • Allowed confidential due diligence.
  • Contained a “Hold Harmless” provision prohibiting recovery of “incidental, consequential, special or speculative damages, lost profits or loss of business, in connection with not moving forward to conclusion of the … negotiations.”

On January 31, 2017, the parties executed a term sheet laying out “the key terms and conditions of a proposed transaction” under which 37celsius would “acquire” Care via a new holding company. Key elements included:

  • 37celsius would contribute $12 million in cash to the holding company.
  • Intel would transfer control of Care to the holding company, giving 37celsius a 70% stake.
  • The transaction was to close “no later than February 14, 2017.”
  • The term sheet was “subject to” the NDA, which “continue[d] in full force and effect.”
  • The term sheet automatically terminated upon: (a) execution of a definitive purchase agreement, (b) mutual agreement of termination, or (c) written notice of termination by Intel (effective no earlier than February 2, 2017).
  • An “Exclusivity Period” barred Intel and Care from negotiating or sharing non-public information with other potential buyers, or entering any agreement that would require Intel to abandon or fail to consummate the transaction with 37celsius, until termination of the term sheet.

Crucially, the term sheet was explicit about its non-binding nature:

  • Except for Confidentiality, Exclusivity, Governing Law, and Third-Party Beneficiaries, the agreement did not “give rise to any legally binding or enforceable obligation on any party.”
  • It stated that “[n]o contract … shall be deemed to exist between [37celsius] and Intel” until a final agreement was executed.
  • In a “No Reliance” clause, it emphasized that “neither this Term Sheet nor any negotiations or discussions … obligates either party to enter into any further agreement,” and that absent a definitive signed agreement, “neither party will be under any legal obligation of any kind whatsoever … by virtue of this Term Sheet or any written or oral expression … except for the matters specifically agreed to in this Term Sheet.”
  • Upon termination, only the Confidentiality, Governing Law, Third-Party Beneficiaries, and Non-Binding Nature (No Reliance) provisions would survive.

Subsequently, the parties prepared final transaction documents and a letter agreement. Signature pages were placed in escrow, to be released only if:

  • 37celsius provided “confirmation satisfactory to Intel” that it would meet its $12 million “Financial Obligation.”
  • If such confirmation was not received by February 14, 2017, Intel could give written notice that the closing would not occur; signatures would be returned and the documents would not become effective.

37celsius never secured the $12 million:

  • On February 14, Intel notified 37celsius that it lacked satisfactory proof of funds and that closing would not occur.
  • Discussions about delaying the closing to February 21 did not solve the problem; 37celsius still lacked the funds.
  • 37celsius then proposed a different economic structure: $6.5 million in cash and an additional $4 million financed by the new holding company for Care—materially diverging from the original deal framework.
  • Intel, meanwhile, negotiated with another private equity firm and closed a sale with that firm by March 1, 2017.
  • Kempe acknowledged internally: “We lost the deal … a real bummer, but we were in a competitive bid situation and that’s the risk you take.”

B. Procedural History

Almost two years later, 37celsius sued Intel and Care in Wisconsin state court. The defendants removed to federal court based on diversity jurisdiction. Any procedural defect in the timeliness of removal was deemed waived by 37celsius; the Seventh Circuit confirmed that subject-matter jurisdiction under 28 U.S.C. § 1332(a)(1) was secure because:

  • Complete diversity existed (37celsius entities were Wisconsin citizens; Intel and Care were California/Delaware citizens).
  • The amount in controversy exceeded $75,000.

In the district court:

  • Defendants obtained a ruling that 37celsius could not recover expectation damages (i.e., “lost profits and value from the lost acquisition of Care”).
  • After expert discovery, defendants moved for summary judgment on all remaining issues.
  • The district court granted summary judgment for defendants.

On appeal, only the breach of contract claim against Intel remained. The Seventh Circuit modified the caption to remove Care Innovations, reflecting that only Intel’s liability was at issue.

C. Holding

The Seventh Circuit affirmed summary judgment for Intel on three independent grounds:

  1. No Type II Agreement: The term sheet was not a Type II preliminary agreement under Delaware law; it did not bind Intel to negotiate in good faith toward a final deal.
  2. No Causation: Even assuming a Type II agreement and a breach of the exclusivity provision, 37celsius could not show that Intel’s conduct was the but-for cause of the failed transaction, as required by Delaware’s decision in SIGA Technologies, Inc. v. PharmAthene, Inc.
  3. No Recoverable Damages: The NDA barred expectation damages in connection with failure to conclude negotiations, and 37celsius did not appeal the denial of reliance damages. Without damages, the breach of contract claim failed as a matter of law.

III. Key Legal Framework and Precedents

A. Delaware Law on Preliminary Agreements: SIGA, Cox, and the Type I / Type II Distinction

The court’s analysis is grounded in Delaware Supreme Court precedent, especially SIGA Technologies, Inc. v. PharmAthene, Inc., 67 A.3d 330 (Del. 2013), refined in Cox Communications, Inc. v. T-Mobile US, Inc., 273 A.3d 752 (Del. 2022).

1. Type I Preliminary Agreements

As described in SIGA, a “Type I” preliminary agreement:

  • Is formed “when the parties agree on all the points that require negotiation (including whether to be bound) but agree to memorialize their agreement in a more formal document.”
  • Is fully binding as to the entire transaction; the formal document is largely a matter of form.

Type I agreements are, in substance, final contracts dressed up in preliminary clothing. Breach of a Type I agreement generally supports full expectation damages as with any complete contract.

2. Type II Preliminary Agreements

A “Type II” agreement:

  • Exists “when [the parties] agree on certain major terms, but leave other terms open for further negotiation.”
  • Is binding only “in a more limited sense” – obliging the parties “to negotiate in good faith” to attempt to reach final agreement within the framework set forth.
  • Does not guarantee that a final deal will be reached; it guarantees only a fair process of negotiation.

However, SIGA holds that if:

  1. There is a binding preliminary agreement to negotiate in good faith (Type II), and
  2. “The parties would have reached an agreement but for the defendant’s bad faith negotiations,”

then the aggrieved party may recover expectation damages—damages placing it in the position it would have occupied had the final contract been concluded.

This “but-for” standard is exacting. A plaintiff must prove, often counterfactually, that:

  • The deal would have closed; and
  • On substantially the framework articulated in the preliminary agreement.

3. Cox Communications and Mutual Intent to Negotiate

In Cox Communications, the Delaware Supreme Court clarified how to identify a Type II agreement:

  • Courts “follow the approach of Delaware courts and look to the language of the [agreement] to determine whether it reflects a mutual intent to be bound to negotiations.”
  • There need not be an explicit “good faith” clause, but there must be some manifestation that the parties have bound themselves to negotiate further to reach a definitive agreement.

In Cox, language that the parties would “enter into a definitive … agreement … on terms to be mutually agreed upon between the parties” sufficed to support a Type II obligation to negotiate, even absent a specific good-faith clause.

B. Delaware Contract Interpretation: BitGo and Daniel

The court relied on standard Delaware interpretive principles:

  • Objective Theory of Contracts: Under BitGo Holdings, Inc. v. Galaxy Digital Holdings, Ltd., 319 A.3d 310 (Del. 2024), Delaware courts ask what a reasonable person in the position of the parties would have understood the terms to mean.
  • Plain Meaning: As reaffirmed in Daniel v. Hawkins, 289 A.3d 631 (Del. 2023), unambiguous contractual language is enforced as written, according to its ordinary meaning, without resort to extrinsic evidence.
  • Whole-Contract Reading: Courts “read the agreement as a whole,” not in piecemeal fashion, ensuring that specific clauses (e.g., “Exclusivity,” “No Reliance”) are harmonized with the overarching non-binding nature of the document.

C. Damages as an Essential Element: Humanigen

Under Delaware law, a breach of contract claim requires proof of:

  1. A contractual obligation;
  2. Breach of that obligation; and
  3. Resulting damage to the plaintiff.

This tripartite test is expressed in Humanigen, Inc. v. Savant Neglected Diseases, LLC, 238 A.3d 194 (Del. 2020). Without damages, there is no actionable breach, even if some contractual obligation was violated.

D. Incorporation by Reference: Town of Cheswold

The interaction between the NDA and the term sheet is evaluated under Town of Cheswold v. Central Delaware Business Park, 188 A.3d 810 (Del. 2018), which holds:

  • A contract may incorporate another instrument if there is an “explicit manifestation of intent” to do so, “referr[ing] to another instrument and mak[ing] the conditions of such other instrument a part” of the contract.
  • If the incorporated matter is “referred to for a specific purpose only,” it becomes part of the contract solely for that purpose.

This framework governs whether the NDA’s “hold harmless” provision bars expectation damages flowing from the failed transaction, or whether it is limited to confidentiality-related claims.

E. Seventh Circuit Precedent on Good-Faith Negotiations: A/S Apothekernes

Though the governing substantive law is Delaware’s, the Seventh Circuit analogized to its own earlier decision in A/S Apothekernes Laboratorium for Specialpraeparater v. I.M.C. Chemical Group, Inc., 873 F.2d 155 (7th Cir. 1989), which interpreted a substantively similar Illinois doctrine recognizing binding preliminary agreements:

  • Such agreements can impose a duty to negotiate in good faith, but
  • The “scope of any obligation to negotiate in good faith can only be determined from the framework the parties have established for themselves in their [preliminary agreement].”

Apothekernes underscores an important limit: a duty to negotiate in good faith is not a duty to accept materially altered economic terms beyond the preliminary agreement’s framework.

IV. The Court’s Legal Reasoning

A. The Term Sheet is Not a Type II Preliminary Agreement

37celsius’ central theory was that the term sheet itself was a Type II agreement that:

  • Bound Intel to negotiate in good faith, and
  • Gave 37celsius a right to expectation damages if Intel breached its negotiation duty—particularly by allegedly breaching the exclusivity clause while continuing talks with another buyer.

The court rejected that characterization by applying Delaware’s objective theory of contracts and plain-meaning rules to the term sheet’s language.

1. The Express “No Obligation” and “No Reliance” Language

The term sheet repeatedly disclaimed any binding obligation to consummate a transaction or even to continue negotiations:

  • It characterized itself as stating “the key terms and conditions of a proposed transaction,” indicating tentativeness.
  • It explicitly provided that, with limited exceptions (Confidentiality, Exclusivity, Governing Law, Third-Party Beneficiaries), the agreement would not “give rise to any legally binding or enforceable obligation on any party.”
  • It further stated that “[n]o contract … shall be deemed to exist” until a definitive purchase agreement was signed.
  • Most pointedly, in the “No Reliance” clause, it stated that neither the term sheet nor any discussions “obligates either party to enter into any further agreement,” and that until a definitive agreement was signed, “neither party will be under any legal obligation of any kind whatsoever regarding any transaction … by virtue of this Term Sheet or any written or oral expression … except for the matters specifically agreed to in this Term Sheet.”

These statements directly clash with the notion that the parties intended to be mutually bound to negotiate further. A reasonable party reading the term sheet would understand:

  • There is an exclusivity commitment and some ancillary binding provisions.
  • There is a non-binding outline of a transaction structure, subject to due diligence and a definitive agreement.
  • There is no legally enforceable duty to continue negotiating toward closing, beyond complying with the identified binding provisions.

By contrast, in SIGA, the parties explicitly agreed to “negotiate in good faith with the intention of executing a definitive License Agreement” in line with the attached term sheet. That express commitment to negotiate was decisive. It is precisely what is missing here.

2. The Presence of Exclusivity Does Not Create a Type II Agreement

37celsius argued that the existence of an exclusivity provision itself implied a mutual obligation to negotiate in good faith. The court rejected that argument as doctrinally unsound and unsupported by cited authority.

The court addressed 37celsius’s reliance on Cambridge Capital LLC v. Ruby Has LLC, 565 F. Supp. 3d 420 (S.D.N.Y. 2021), a federal case interpreting a Delaware-governed letter. In Cambridge Capital:

  • The agreement expressly stated it was “an expression of mutual intent to proceed with the drafting of the share purchase agreement and collateral documents contemplated hereby in accordance with the principles stated herein.”
  • The court, at the motion to dismiss stage, held that this language—combined with an exclusivity clause—made it “plausible” that there was a duty to negotiate in good faith.

By contrast:

  • The term sheet here lacked any analogous “mutual intent to proceed” language.
  • Delaware’s Type II analysis is highly language-specific and contextual, and Cambridge Capital was at the pleading stage, not at summary judgment with a developed record.

The Seventh Circuit therefore characterized Cambridge Capital as not controlling and distinguishable. Crucially, it refused to adopt any blanket rule that an exclusivity provision, by itself, converts a non-binding term sheet into a Type II agreement.

3. Substance of the Term Sheet: Fully Specified Economics, No Open Framework

The court also noted that the term sheet:

  • Set out the entire economic structure of the contemplated transaction—price, ownership split, transaction mechanics, and closing date.
  • Left “very little … to negotiate regarding the deal.”

Type II agreements generally arise where major deal points are agreed but substantial terms remain open and subject to negotiation within an agreed framework. Here, the term sheet operated more as a conditional, non-binding outline of a complete deal, subject only to:

  • Due diligence, and
  • Execution of definitive transaction documents—and, importantly,
  • 37celsius actually providing the agreed $12 million.

Given the explicit disclaimers and the completeness of the economic terms, the court held that:

“The term sheet is not a Type II agreement; it did not create an ‘obligation to negotiate the open issues in good faith.’”

B. Causation: The Failure of 37celsius to Fund the Deal

Even if the term sheet had been a Type II preliminary agreement, 37celsius still needed to satisfy the second prong of SIGA—showing that the parties would have reached a final agreement “but for” Intel’s bad-faith negotiations.

The court found that 37celsius could not meet this requirement as a matter of law because:

  • The undisputed record showed that 37celsius never had the $12 million required by the term sheet and letter agreement.
  • 37celsius admitted it never had sufficient funds to meet that obligation by February 14 or even by the proposed extended date of February 21.
  • Instead of closing on the agreed terms, 37celsius sought to restructure the deal to pay only $6.5 million in cash with an additional $4 million financed by the Care holding company—a materially different economic proposition.

Under SIGA, the but-for analysis is tethered to whether the parties would have reached an agreement “within the agreed framework” of the preliminary agreement. Here:

  • The “agreed framework” required a $12 million cash infusion from 37celsius.
  • 37celsius never satisfied that requirement and instead proposed moving outside that framework.
  • Intel was under no obligation to accept a different deal structure.

The Seventh Circuit drew support from A/S Apothekernes, emphasizing that good-faith negotiation duties do not compel acceptance of terms materially different from the preliminary agreement. The failure of 37celsius to fund the deal was an independent, superseding cause of the transaction’s collapse.

Furthermore:

  • There was no genuine dispute of material fact about why the deal failed: it was 37celsius’s lack of funding, not Intel’s interactions with other bidders.
  • Internal communications from 37celsius (“We lost the deal … we were in a competitive bid situation and that’s the risk you take.”) reinforced that reality.

Thus, even assuming Intel breached the exclusivity provision or any Type II negotiation obligation, 37celsius could not show that, but for that breach, the deal would have closed. That failure of causation independently defeated the claim for expectation damages.

C. Damages: NDA Bar on Expectation Damages and Waiver of Reliance Damages

The court’s third ground was dispositive even apart from the Type II and causation issues: 37celsius could not show any recoverable damages.

1. Expectation Damages Waived by NDA

The NDA, signed at the outset, contained a broad “hold harmless” clause stating that neither party could recover:

“incidental, consequential, special or speculative damages, lost profits or loss of business, in connection with not moving forward to conclusion of the … negotiations.”

This language clearly encompassed:

  • Lost profits from the unrealized acquisition, and
  • Loss of business opportunity relating to the non-closure of Care transaction.

The term sheet explicitly provided that it was “subject to” the NDA, “which continues in full force and effect.” Under Town of Cheswold, this manifested a clear intent to:

  • Incorporate the NDA’s conditions—including its damages limitations—into the transactional framework, and
  • Maintain those limitations throughout the term sheet’s life.

37celsius argued that:

  • The NDA should be read as incorporated only for confidentiality purposes, particularly given a confidentiality clause in the term sheet.
  • Therefore, the expectation-damages bar would apply only to confidentiality-related claims.

The court disagreed. It found no textual limitation in the term sheet’s reference to the NDA that restricted the NDA’s operation to confidentiality alone. Nor did the NDA itself cabin its damage waiver to a particular subset of claims:

  • The waiver applied “[u]nder no circumstances” to “lost profits or loss of business” “in connection with not moving forward to conclusion of the discussions or negotiations.”
  • That phrase directly captured exactly what 37celsius sought: the value of a deal that never closed.

37celsius cited an NDA clause (Section 13(e)) indicating that other agreements between the parties would not be “affected” by the NDA. But the court held that this could not override the express statement in the term sheet that the NDA remained in full force and effect, including its damages limitations. The two documents must be read together.

Thus, even if:

  • There were a binding obligation (Type II or otherwise), and
  • Intel had breached that obligation,

the parties had contractually barred recovery of expectation damages for not concluding the negotiations. That foreclosed the very category of damages 37celsius was seeking.

2. Reliance Damages Not Preserved on Appeal

Separate from expectation damages, the law of contracts recognizes reliance damages: reimbursement for costs reasonably incurred in reliance on the other party’s promise (e.g., due diligence expenses, advisory fees).

The NDA did not explicitly bar reliance damages, and the exclusivity provision itself referenced 37celsius’s expenses as part of the consideration for exclusivity (“in consideration of the expenses that [37celsius] has incurred and will incur in connection with the Transaction”). That might, in another case, provide a foundation for limited reliance-based recovery.

However, in this case:

  • The district court held that 37celsius had not shown any compensable reliance damages.
  • 37celsius did not challenge that ruling on appeal.

Under Seventh Circuit precedent (e.g., Motorola Solutions, Inc. v. Hytera Communications Corp. Ltd., 108 F.4th 458, 494 (7th Cir. 2024)), an unchallenged ruling on a damages theory is left intact. Therefore, any reliance-damages theory was waived at the appellate level.

Combining:

  • The NDA’s bar on expectation damages, and
  • The unchallenged denial of reliance damages,

the court concluded that 37celsius could not establish the essential “damages” element of a Delaware breach of contract claim. On that basis alone, judgment for Intel was appropriate.

V. Complex Concepts Simplified

A. Type I vs. Type II Preliminary Agreements

  • Type I Agreement (Fully Binding Outline):
    • The parties have agreed on all material terms.
    • They intend to be bound immediately, even though they plan to sign a more formal document later.
    • If one party walks away, it can be sued as if it had breached a final contract.
  • Type II Agreement (Binding Duty to Negotiate):
    • The parties have agreed on key terms but left others open.
    • They commit to negotiate in good faith within the agreed framework, but they are not bound to actually close.
    • Breach gives rise to damages only if the plaintiff can prove the deal would likely have been finalized but for the bad faith.

B. Expectation vs. Reliance Damages

  • Expectation Damages (“Benefit of the Bargain”):
    • Aim to put the injured party where it would have been if the contract had been performed.
    • Often includes lost profits, lost value of a business, or the economic upside of a lost deal.
    • In this case: the “lost value from the lost acquisition of Care.”
  • Reliance Damages:
    • Aim to reimburse the injured party for costs incurred in reliance on the contract or negotiation.
    • Typical examples: due diligence expenses, legal fees, financial advisory fees directly tied to the contemplated transaction.
    • Here: 37celsius arguably incurred such costs, but the district court found no compensable reliance damages and that ruling was not appealed.

C. But-For Causation

“But-for causation” means that:

  • Without the defendant’s wrongful conduct, the harm would not have occurred.
  • Here, 37celsius needed to show that, if Intel had fully honored its exclusivity and negotiation duties, the Care deal would have closed on the $12 million terms.
  • Because 37celsius never had the $12 million at any relevant time, it could not show that Intel’s alleged breach caused the deal’s failure.

D. Exclusivity Clauses

An exclusivity clause in a term sheet typically means:

  • For a specified period, the seller won’t negotiate with other potential buyers or share confidential information with them.
  • This gives the prospective buyer comfort that it can invest in diligence and deal structuring without being undercut by a competing bid.

However:

  • Exclusivity alone does not mean the seller is bound to close or even to continue negotiating if other conditions (e.g., financing, due diligence) are not met.
  • It is a narrow, standalone obligation, distinct from a broader Type II duty to negotiate in good faith toward a final deal.

E. “No Reliance” Clauses

“No Reliance” clauses typically state that:

  • The parties are not relying on any statements or representations outside the written document.
  • They often disclaim obligations arising from discussions or negotiations unless explicitly written into a definitive agreement.

Here, the “No Reliance” clause served a dual function:

  • It prevented claims based on alleged promises or understandings not set out in the term sheet.
  • It expressly stated that the term sheet imposed no legal obligation “to enter into any further agreement,” undermining any argument that it was a Type II agreement.

VI. Impact and Significance

A. For Transactional Lawyers and Deal Parties

This decision sends a clear message about how Delaware law—and federal courts applying it—will treat term sheets and NDAs in M&A and private equity transactions.

1. Clarity of Non-Binding Status

  • Parties who wish a term sheet or letter of intent to be non-binding should:
    • Include explicit statements that no binding obligations exist except for identified provisions (e.g., confidentiality, exclusivity, governing law).
    • Use clear “No Reliance” and “No Contract” language.
  • Courts will enforce these disclaimers according to their plain meaning, making it difficult for a disappointed party to retroactively characterize such documents as Type II agreements.

2. Drafting Type II Agreements: Explicit Intent to Negotiate

  • If parties truly intend to create a binding obligation to negotiate in good faith:
    • They should explicitly say so, as in SIGA and Cox Communications (“will negotiate in good faith … with the intention of executing a definitive agreement”).
    • They should avoid sweeping non-binding and “No Reliance” language that cuts against that intent.
  • Failure to include such language will make it far harder to claim later that a term sheet was Type II.

3. Use of Exclusivity Clauses

  • Exclusivity clauses are valuable protections for buyers, but:
    • They do not automatically create a Type II duty to negotiate.
    • Their breach may support a claim, but only if the plaintiff can also show causation and recoverable damages.
  • Deal counsel should consider:
    • Pairing exclusivity with explicit obligations (e.g., to negotiate in good faith or to work exclusively toward completion) if broader process protections are desired.
    • Being equally explicit if exclusivity is meant to be the only binding obligation related to deal process during the term sheet stage.

4. Damages Waivers in NDAs and Term Sheets

  • NDA clauses waiving “lost profits or loss of business in connection with not moving forward to conclusion of the negotiations” are enforceable and meaningful.
  • They can:
    • Eliminate the most lucrative category of potential damages (expectation damages) for failed deals.
    • Substantially reduce the economic stakes of litigation over broken negotiations.
  • Buyers should be aware that agreeing to such waivers may preclude recovery of the “lost deal value” even if the seller later acts in bad faith.
  • Sellers may increasingly rely on such clauses as a risk-management tool.

B. For Litigation Strategy

1. Proof of Causation Under SIGA

  • It is not enough to show:
    • A preliminary agreement, and
    • Some form of bad faith or breach by the other side.
  • The plaintiff must marshal evidence that:
    • It was financially and operationally capable of closing on the agreed framework.
    • The defendant’s bad faith was the reason the deal did not close—not the plaintiff’s own lack of funding or changed bargaining position.
  • Emails like Kempe’s (“We lost the deal … that’s the risk you take”) can be decisive, undermining assertions that the counterparty’s breach was the true cause.

2. Preserving Damages Theories on Appeal

  • Even where liability is contested, litigants must:
    • Challenge adverse findings on all viable damages theories (expectation, reliance, restitution) at the trial level and on appeal.
    • Recognize that unchallenged rulings (as with reliance damages here) will remain binding and can be dispositive.
  • This case illustrates how a claim can fail completely simply because no category of damages remains available, even assuming arguendo some breach.

C. Doctrinal Clarifications Under Delaware Law

  • Type II Agreements Are Narrowly Construed: Courts will not force a Type II overlay where the parties expressly opted for non-binding arrangements, especially with “No Reliance” and “No Obligation” language.
  • Exclusivity Is Distinct from a Duty to Negotiate: Exclusivity provisions are treated as discrete, limited commitments, not as a back door to Type II obligations absent clear textual support.
  • Contractual Allocation of Risk in Negotiations: Parties remain free to allocate the risk of failed negotiations through NDAs and term sheets—such as waiving lost profits and business-opportunity damages—and Delaware courts will enforce such allocations.

VII. Conclusion

37celsius Capital Partners, L.P. v. Intel Corporation reinforces three core principles at the intersection of Delaware contract law and modern deal-making:

  1. Clear Non-Binding Language Controls: Where a term sheet repeatedly disclaims any legal obligation to proceed and expressly provides that no contract exists until a final agreement is signed, courts will not retroactively treat it as a Type II preliminary agreement, even if it contains exclusivity provisions.
  2. Proof of But-For Causation is Essential for Expectation Damages under SIGA: A party seeking lost deal value must show that, but for the other side’s bad-faith negotiations, the transaction would have closed on the agreed framework. A buyer that never had the agreed purchase price cannot meet this burden.
  3. Contractual Damages Waivers Matter: NDAs that bar expectation damages for failure to conclude negotiations are enforceable and can by themselves defeat claims for lost profits and lost business value; if reliance damages are not preserved, the entire breach claim may fail for want of damages.

Practically, the case serves as a blueprint for drafting robust non-binding term sheets and NDAs under Delaware law, and as a cautionary tale for buyers who sign broad damages waivers and later seek to recover the upside of a deal they were financially unable to close. It also sharpens the contours of Delaware’s Type II doctrine: exclusivity and a detailed term sheet do not, without more, create a binding duty to negotiate in good faith, especially when the parties have unambiguously agreed otherwise.