In connection with a recent decision granting a declaratory judgment to recognize the terms of and to enforce a loan, the Court of Chancery in the matter of Standard General L.P. v. Charney, C.A. No. 11287-CB (Del. Ch. Dec. 19, 2017), addressed several issues of practical importance to Delaware corporate and commercial litigators. The background facts of this case were recited in a summary of a prior decision by the Court of Chancery in this matter appearing on these pages.
Highlights of Some Noteworthy Legal Principles Applied in this Decision:
- When there is a Delaware choice of law clause, and the clause is broadly written, Delaware will enforce it as covering both tort claims and contract claims, even when asserted in affirmative defenses. See footnote 80.
- A fraudulent inducement argument is “not available when one had the opportunity to read the contract and by doing so could have discovered the misrepresentation.” See footnote 97. Moreover, Delaware law also finds it unreasonable to rely on an oral representation that is expressly contradicted by the parties’ written agreement.
- Unlike a slight breach of contract, a prior material breach of contract may excuse contractual performance. See footnotes 163 and 164.
- The court discusses the four criteria to satisfy the requirement for an actual controversy when seeking a declaratory judgment pursuant to 10 Del. C. § 6501.