Elon Musk is being sued by Twitter for a $44 billion contract breach

According to a court filing, Twitter sued Elon Musk on Tuesday for breaching the $44 billion deal to buy the social media platform and sought a Delaware court to order the world's richest person to complete the merger at the agreed $54.20 per Twitter share.

According to the lawsuit, "Musk apparently believes that, unlike every other party subject to Delaware contract law, he is free to change his mind, trash the firm, disrupt its operations, destroy stockholder value, and walk away." 

The lawsuit kicks off what promises to be one of the largest legal battles in Wall Street history, pitting one of the business world's most flamboyant entrepreneurs against staid contract wording.

Musk announced on Friday that he was cancelling the agreement because Twitter violated it by failing to react to demands for information on fraudulent or spam accounts on its platforms, which is critical to its commercial performance..

Musk, the CEO of electric vehicle manufacturer Tesla Inc, did not immediately respond to a request for comment.  The complaint accused Musk of "a long list" of merger agreement violations that "placed a cloud over Twitter and its business."

On Tuesday, shares of the social media site sank to $34.06, a significant drop from the levels around $50 at which they traded after the purchase was approved by Twitter's board in late April. 

Musk said he was cancelling the merger due to a lack of knowledge about spam accounts and misleading statements, which he called a "material adverse event." He further said that executive departures amounted to a failure to continue business as usual, which Twitter was required to do.

Twitter stated that it negotiated to have language in the merger agreement removed that would have deemed such firings a violation of the usual course requirement. Twitter labelled Musk's arguments a "pretext" with no merit, and suggested his choice to leave had more to do with a drop in the stock market, particularly for tech equities.

Tesla stock, Musk's major source of wealth, has lost 30% of its value since the deal was disclosed, closing on Tuesday at $699.21. According to legal experts, based on the material available, Twitter appears to have the upper hand because of the way Musk structured the purchase, declining to conduct typical pre-merger diligence.