Delaware Business Litigation Report

Court of Chancery Explains When Contract Bars Tort Claims and Arbitration

Flores v. Strauss Water Ltd., C.A. 11141-VCS (September 22, 2016)

This is a great decision on when the provisions of a contract bar tort claims of fraud and tortious interference. Briefly, when the contract speaks to an issue (e.g., expressly permitting certain acts, or imposing no duty to act), a party may not assert a tort claim that would deny the other party the benefit of its bargain. Further, when the contract between two parties selects a judicial forum for dispute resolution, arbitration is not part of the deal even if provided in a collateral contract involving one of those parties, at least not where there are no grounds for binding the non-signatory to the arbitration clause.

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