Delaware Business Litigation Report

Supreme Court Upholds Expectation Damages Award For Breach of A Preliminary Agreement

SIGA Technologies Inc. v. Pharmathene Inc.,  Del., No. 20, 2015 (December 23, 2015)

This is an important decision, particularly if it is a precedent that will be followed in other contexts. Basically, the Court has held that expectation damages may be awarded for the breach of even a preliminary agreement when the agreement is sufficient to include an obligation to negotiate any remaining terms. As the dissenting opinion points out, other jurisdictions have confined the award in such cases to only reliance damages. Here, however, the bad faith of the defendant warranted greater damages, under the “wrongdoer rule” that excuses less proof of the actual damages when there is adequate proof of some damages and the wrongdoer's actions have made the amount of damages harder to prove.

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