Delaware Securities Act Not Applicable to Actions Outside of Delaware

Eurofins Panlads, Inc. v. Ricerca Biosciences, LLC, C.A. No. 8431-VCN (Del. Ch. May 30, 2014).

This Delaware Court of Chancery opinion provides an analysis of the Delaware Securities Act and concludes that it does not apply to the alleged fraud that occurred outside the State of Delaware.  The court explained that status as a Delaware corporation alone does not provide a sufficient nexus for application of the Delaware Securities Act to activities that occur outside the state.

The court also explained the general rule that a corporate officer who signs a contract on behalf of a corporation does not thereby become a party to that contract.  However, there is an exception to that general rule and officers can be personally liable when they personally participate in a tort, for example, if they fraudulently induce a party to enter into the contract.  See footnotes 148 and 149.