Delaware Supreme Court Interprets New York Law
In Rohn Industries, Inc. v. Platinum Equity, LLC, (Del. Supr., October 20, 2006), read opinion here , the Delaware Supreme Court addressed a contract interpretation question that applied New York law. It is not uncommon for Delaware courts to apply the law of other states. This case involved the appeal of a judgment entered after trial, based on a finding that one party's subjective good faith was an adequate basis to terminate the contract in light of a clause that allowed termination if the party had a good faith belief, prior to closing, that it would be subject to asbestos liability. In sum, the Supreme Court found that there was also a requirement based on contract law principles, including the Restatement (Second) of Contracts, that there be an objectively reasonable basis for the party to believe it would be subject to liability, in order for the good faith belief to suffice.
