A recent letter ruling is useful for commercial litigators for two contract interpretation principles that the Court of Chancery addresses in a business-like manner. In Frank Robino III v. Paul Robino; Charles Robino, et al. (Del. Ch. Aug. 16, 2017), the Court addressed:
(1) What standard is applied when a person claims that an agreement is not binding due to duress and/or allegations of diminished capacity as a result of substance abuse, including intoxication;
(2) When a settlement agreement reached during mediation that might not have all the complete formality and comprehensiveness of a typical agreement, can still be enforceable.
The procedural context of this case was a motion to enforce a settlement agreement that was reached after mediation. Both parties were represented by competent counsel during the mediation, and the court describes the mediator as one of the most experienced mediators in Delaware. The court granted the motion to enforce a settlement agreement and rejected the two defenses presented.
The first rejected defense was based on the asserted argument of duress as well as substance abuse that apparently included intoxication or inebriation. The court cited to Delaware case law explaining the burden of proof and the challenges in prevailing on such a defense, which was not successful in this case.
Regarding the mediation that resulted in a settlement agreement, the court found that the essential terms of the agreement were agreed to, in a signed document at the mediation. It was not clear whether a more formal and comprehensive agreement was contemplated, although the parties did attempt unsuccessfully to negotiate a more formal and comprehensive agreement after the mediation. Nonetheless, the court found that the terms that were agreed to and signed at the mediation were sufficient to enforce it as a binding contract.