Posts in Breach of Contract

Court Of Chancery Explains The Implied Covenant Rules

NAMA Properties LLC v. Related WMC LLC, C.A. 7934-VCL (November 17, 2014) This is a virtual treatise on the implied covenant of good faith and fair dealing.  As it points out, the covenant is a gap filler that is to be used rarely and is considered part of the contract. Hence, it does not require a showing of bad faith for it to be violated. Here the court dealt with the duties of an escrow agent. The opinion is also very good at explaining what is required to find a tortious interference with a contract by the parent of a subsidiary. It is often wrongly thought that members of the same corporate family cannot be held liable for the breach of contract by another member of the family for a contract they did not sign. As this decision shows, that may not be so and a parent can be on the hook when it wrongly causes a subsidiary to breach its contract. Share

Court Of Chancery Claim Of Oral Agreement

Black Horse Capital LP v. Xstelos Holdings, Inc., C.A. 8642-VCP (September 30, 2014) This decision is yet another example of the difficulty in recovering under almost any legal theory, except breach of contract, when there is a detailed contract that was designed to exclude other oral agreements. Not only will claims of a side oral agreement be rejected, but so too will theories like unjust enrichment that are pled to get around the problem that the plaintiff is not satisfied with the deal made in the writing that the parties signed. Share

Supreme Court Stresses Literal Contract Interpretation

ev3 Inc v. Lesh, No. 515, 2013 (Del. September 30, 2014) Delaware law favors a strict interpretation of contract language. Here, the Supreme Court rejected an attempt to read into a contract provisions from a letter of intent signed before the final contract was executed. The final contract did not provide by its literal terms such an interpretation and the Supreme Court would not have any  of the plaintiff's attempts to read it otherwise. Share

Court Of Chancery Explains Contract Interpretation

Veloric v J. G. Wentworth Inc., C.A. 9051-CB (September 18, 2014) In what may be one of the most factually complicated cases in years, this decision is a good example of the Court of Chancery's method of interpreting a contract to make it make sense from a business point of view. It takes a certain clarity of mind to wade through the verbose contract language and surrounding facts and the Court pulls it off very well. The lesson is that technical legal  arguments are just not as persuasive as a common sense approach that fits the business reality of the parties. Share

CCLD Explains The Borrowing Statute And Duplicative Claim Preclusion

Furnari v. Wallpang Inc.,  C.A. 13C-04-287 JRJ CCLD (Del. Super. April 16, 2014)

Delaware has a statue that requires a court to "borrow" the statue of limitations of another jurisdiction when a plaintiff seeks to avoid a limitations problem elsewhere by suing in Delaware. This decision explains when that statute will apply.  The decision is also helpful in explaining when duplicative claims cannot be brought. That usually is the case when a plaintiff tries to expand a breach of contract action into a tort claim, for example.

Share

Court Of Chanery Explains Damages Calculation For Consent Breach

Fletcher International Ltd. v. ION Geophysical Corporation, C.A. 5109-CS (December 4, 2013)

What are the damages when a party's right to consent to a transaction is violated?  There is no easy answer to that question that involves predicting what might have been won in fair negotiations for that consent.  Nonetheless, here the Court explains how it determines what are the reasonable expectations of the non-breaching party.

Share

Federal Court Clarifies Duty To Negotiate

Osco Motors Company, LLC v. Marine Acquisition Corp., No. 13-868-RGA-MPT (D. Del. December 2, 2013)

The duty to negotiate in good faith is now well recognized in Delaware under SIGA Acquisition Inc. v. PharmAthene Inc., 67 A.3d 330 (Del. 2013).  However, what is less clear is when exactly does that duty arise. This decision explains when the duty is created and distinguishes Delaware from New York law in that respect.

Share

Court Of Chancery Upholds Survival Claim Limits

ENI Holdings LLC v. KBR Group Holdings LLC, C.A. 8075-VCG (November 27, 2013)

This is another decision holding that a contractual limit on when a claim "survives" is actually a limitation on when such a claim may be filed in court based on a breach of contract.  In short, survival clauses may shorten the statute of limitations.

The decision is also helpful in explaining that there is no requirement that the claim actually be known for it to expire and how to plead any of the several tolling doctrines that might apply to save such a claim.

Share

Court Of Chancery Reviews Theories Of Liability Under Sale Agreement

Osram Sylvania Inc. v. Townsend Ventures LLC,  C.A. 8123-VCP (November 19, 2013)

A buyer of a business may not get what he was told to expect. This decision is a good review of the legal theories available to recover under those circumstances.

Share

Supreme Court Upholds Its Pleading Standard

Winshall v.Viacom International Inc., No. 39, 2013 (October 7, 2013, corrected October 8, 2013)

This decision is particularly interesting for its affirmance in the face of questions from the Court of Chancery that the Delaware pleading standard is "reasonably conceivable" and not the federal "plausible" test of whether a pleading alleges facts sufficient to state a claim.

Share

Superior Court Explains Mutual Mistake Law

Newport Disc Inc. v. Newport Electronics Inc.,  C.A. N12C-10-228 MMJ CCLD (October 7, 2013)

This is an action where the defendant tried to avoid its contractual obligations by asserting a mutual mistake led to the wrong language in the contract. The Court rejected that argument for want of clear proof of a mutual mistake.  This illustrates the all-too-human tendency to feel that the wrong result must be a "mistake."  The Court just is not going to buy that cop out.

Share

Superior Court Explains Non-Reliance Law

Alltrista Plastics LLC. v. Rockline Industries, Inc., C.A. N 12C-09-094 JTV (September 4, 2013)

This is an excellent summary of what language is needed to prevent a claim based on reliance on representations outside the terms of the actual contract.  The language must clearly refer to the intention of the parties to bar such claims.

Share

Supreme Court Limits Laches Defense

Levey v. Brownstone Asset Management L.P., No. 551, 2012 (August 27, 2013)

When does laches apply to a claim filed in the Court of Chancery?  Generally that Court follows the statute of limitations that would have applied in the law court, the Delaware Superior Court.  However, the time to file suit may be extended in "unusual conditions or extraordinary circumstances," under IAC/InterActive Corp. v. O'Brien, 26 A.3d 174 (Del. 2011). This decision explains when those circumstances exist.

Share

Superior Court Explains Damage Limitation Clauses

RHA Construction Inc. v. Scott Engineering Inc., C.A. N11C-03-013 JRJ CCLD (July 24, 2013)

When is a limitation on a damages clause enforceable?  This decision explains Delaware law on that issue, particularly when the actual damages are too difficult to predict and the limitation is reasonable.

Share

Court Of Chancery Clarifies Damages For Breach

Universal Enterprise Group LP v Duncan Petroleum Corporation, C.A. 4948-VCL (July 1, 2013)

This careful decision explains how to calculate damages in a breach of contract case.  That is not as easy as it sounds. Plaintiffs frequently try to get tort-type damages in breach of contract cases, particularly under the loss of value theory.  This decision cuts off those types of damages.

Share