A recent Delaware Court of Chancery decision provided a thorough examination of the titular topic in connection with allegations of fraudulent enticement to invest. In Sehoy Energy LP v. Adriani, C.A. No. 12387-VCG (Del. Ch. June 16, 2021), the court discussed a few things that should be of interest to corporate and commercial litigators.
● The facts of this case provided the rare exception to the general rule that breach of contract claims cannot be bootstrapped into a fraud claim.
● The court provided an excellent recitation of the five elements of a fraudulent inducement claim. See Slip op. at 27-30. The court also provides key reasoning about the application of those principles.
● Another useful nugget with wide applicability is the court’s discussion about the following principle: when rescissory damages are granted, the claimant cannot also receive contradictory money damages. See Slip op. at 31 and footnote 183.