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Case 1 :04-cv—00583-GIVIS Document 84 Filed 08/22/2005 Page 1 of 3
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
In re: Chapter ll
INACOM CORP., et al., Bankruptcy Case No. 00-2426 (PJW)
Debtors.
INACOM CORP., on behalf of all affiliated Civil Action No. O4-CV-583 (GMS)
debtors,
Plaintiff]
vs.
LEXMARK NTERNATIONAL, INC.,
Defendant and Third-Party
Plaintiff,
vs.
COMPAQ COMPUTER CORP., ITY
CORP., and CUSTOM EDGE, INC.,
Third-Party Defendants.
HEWLETT-·PACKARD COMPANY ’S REPLY IN SUPPORT OF MOTION IN LIMINE
TO EXCLUDE TESTIMONY REGARDING GUARAN TY BASED ON
FRANCIS LETTER DATED FEBRUARY 16, 2000
Lexmark seeks to hold Hewlett-Packard Company ("HP") liable for over $2.9
million on grounds of alleged breach of contract based on a several-sentence informational letter
that was sent to Lexmark in connection with the closing of an asset purchase agreement. The
Francis Letter dated February 16, 2000 does not constitute an enforceable contract-- and should
be excluded from evidence -- because there was no consideration in exchange for the pu1·ported
assumption or guaranty of Inacom’s pre-existing obligations to Lexmark.
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Case 1:04-cv—00583-G|\/IS Document 84 Filed 08/22/2005 Page 2 of 3
ARGUMENT
I. WHETHER LEXMARK ALLEGES THAT THE FRANCIS
LETTER IS A PRIMARY OR SECONDARY OBLIGATION
MAKES NO DIFFERENCE.
Lexmark insists that the Francis Letter is not merely a secondary obligation, but
an "outright contractual assumption of debts owed to Lexmark." Regardless of whether the letter
purports to be a primary or secondary obligation, it is unenforceable because there was no
consideration.
As a matter of basic hornbook law, the formation of a contract requires mutual
assent between the parties to be bound by a promise and consideration for the promise. See, e. g.,
ATACS Corp. v. Trans World Communications, Inc., 155 F. 3d 659, 665 (3rd Cir. 1998) (“While
typically analyzed in terms of offer and acceptance, [Corbin citation], the decisive inquiry in
contract formation is the ‘manifestation of assent of the parties to the terms of the promise and to
consideration for it. . .’ [Williston citation]"). See generally Restatement (Second) of Contracts §
17 and Restatement (Third) of the Law of Suretyship and Guaranty § 9(1).
II. THE ALLEGED "ASSUMPTION" OR "GUARANTY" FAILS FOR
LACK OF CONSIDERATION.
Lexmark is unable to cite any consideration in exchange for the alleged promise
set forth in the Francis Letter. For an agreement to be enforceable there must be some
consideration in exchange for the promise. See, e. g., In re Johnson ’.s· Estate, 346 N.Y.S.2d 283,
286-87 (1973) (bank promise to serve as trustee in the future at reduced rate if it were selected
did not bind either party).
Testimony by Ben Wells that the letter was sent "to ensure the continued flow of
products" from vendors does not evidence consideration. The letter did not create any new
obligations on the part of either Lexmark or Compaq. Lexmark did not bargain for any
additional guarantee of payments by Compaq or any assumption of obligations by Compaq.
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Case 1:04-cv—00583-G|\/IS Document 84 Filed 08/22/2005 Page 3 of 3
Lexmark’s continued shipment of products to Inacom did not constitute separate consideration
because shipments were based on a pre-existing contract. Moreover, Lexmark was fully paid for
its shipments of products to both Inacom and Compaq.
Lexma.rk’s attempt to turn the Francis Letter into a contractual obligation should
be rejected because the letter lacks the basic elements required of a contract.
CONCLUSION
HP requests that the Court grant an in limine order precluding Lexmark from
presenting any testimony, documentary evidence, or argument that the Francis Letter constitutes
a "contractual assumption" or "guaranty" requiring that HP pay amounts were actually paid by
Inacom, and are now the subject of a preference action.
Dated: August 22, 2005
Wilmington, Delaware MORRIS, NICHOLS, A?HT & TUNNELL
William Sudell, Jr. (No. 463)
Derek C. Abbott (No. 3376)
Gregory T. Donilon (N o. 4244)
Daniel B. Butz (No. 4227)
1201 N. Market Street
Wilmington, DE 19899-1347
(302) 658-9200
- and -
FRIEDMAN DUMAS & SPRINGWATER LLP
Ellen A. Friedman
Cecily A. Dumas
Gail S. Greenwood
Brandon C. Chaves
One Maritime Plaza, Suite 2475
San Francisco, CA 94lll
(415) 834-3800
Attomeys for Third-Party Defendant
Hewlett-Packard Company
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