Document Type
Article
Publication Title
Vanderbilt Law Review En Banc
Publication Date
Summer 2024
Page Number
181
Keywords
corporate law, contracts, Delaware courts
Disciplines
Commercial Law | Contracts | Law
Abstract
In the decisions discussed herein, both the Delaware Supreme Court ("Supreme Court") and the Delaware Court of Chancery ("Chancery Court") reaffirmed the Delaware judiciary's commitment to honoring contract language, whenever possible, to settle contractual disputes. Absent irreconcilable ambiguity, no coloring outside the lines will be considered. The goal generally is to reflect the intent of the parties while avoiding absurd or illogical results. Ironically, in each of these cases, better drafting could have ensured the parties were on the same page: " In Arwood v. AW Site Services, Vice Chancellor Slights, confirming Delaware's status as "'more contractarian' than most states," declined to impose an "anti-sandbagging" provision where Seller neglected to negotiate for such protection in the APA. As such, Delaware respects contracting parties' right "to enter into good and bad contracts." Bottom line: (i) if contracting parties fail to include either a pro- or anti- sandbagging provision in a purchase agreement, Delaware will presume the agreement is pro-sandbagging, and (ii) sandbagging is not implicated by a purchaser's negligence or recklessness-actual knowledge of the breach is required.
Recommended Citation
Robert Reder and Kathleen E. Sharkey,
A "Profoundly Contractarian Predisposition": Delaware Courts Decide Recent Drafting Disputes by Limiting Their Review to Four Corners of Contracts, 77 Vanderbilt Law Review En Banc. 181
(2024)
Available at: https://scholarship.law.vanderbilt.edu/faculty-publications/1704