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Expert Analysis

Lessons On Contingent Earnouts From Utah District Court

Law360, New York (May 31, 2016, 12:04 PM EDT) -- A recent holding by the U.S. District Court for the District of Utah offers important lessons for anyone contemplating a contingent earnout. In Wrapsol Acquisition LLC v. Otter Products LLC 2:15cv725-DB (U.S. Dist. Utah)(2016), the court found that the existence of a "best interest" clause prohibited any claim for breach of the implied covenant of good faith and fair dealing, even where the seller had alleged several bad faith actions designed to intentionally lower the potential earnout payment, including ultimately closing the sellers' former business a year before the end of the earnout period....

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