Chancery Clarifies Definition of “Contract Under Seal”

In Sunrise Ventures, LLC v. Rehoboth Canal Ventures, LLC, No. 4119 (Del. Ch. March 4, 2010), read letter decision here, the Court of Chancery clarified the definition of a "contract under seal", which the Delaware Supreme Court recently addressed in the Whittington case summarized here, as a special type of contract that will enjoy a statute of limitations lasting 20 years.

The key "take away" legal nuggets that make this relatively short decision noteworthy can be highlighted in the following brief bullet points:

  • In order to enjoy the long statute of limitations available to "contracts under seal", the word "SEAL" must be affixed next to the signature lines of the contract’s signatories.
  • In this case, the Court rejected the argument that such special status can be enjoyed by those contracts that have the mere inclusion of the word only in the "testimonium clause". (i.e., the introductory phrase at the top of some signature lines which provides: "In Witness Whereof, the parties have set their Hand and Seal, this ___ day of…")
  • Though not directly ruling on this issue, the Court was skeptical of the argument that the requirements of a "contract under seal" could be satisfied if less than all the signature lines included the word "seal" next to them.

The procedural context of this case was the denial of a motion for reargument. The opinion itself which the losing party sought to reargue, was either not remarkable enough or did not cover a topic within the usual scope of this blog, so we did not provide a summary. Yes, the decision on the motion for reargument was more noteworthy than the main opinion for purposes of this blog’s coverage. The main opinion sought to be reargued can be found at 2010 WL 363845 (Del. Ch. Jan. 27, 2010).