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Court of Chancery Addresses Contract Formation

CSH Theatres L.L.C. v. Nederlander of San Francisco Associates, C.A. No. 9380-VCMR (Del. Ch. July 31, 2018)

This drama arises from a dispute involving the Curran Theatre in San Francisco.  The decision mostly deals with when alleged conversations are not enough to constitute an enforceable contract, exhaustively reviewing the applicable law. Basically, if you want to enforce a promise, reduce it to a writing including all essential terms.  Contemporaneous evidence of a sufficiently detailed promise is a potential fallback, but conflicting testimony about vague terms is not.

The decision has two other interesting aspects.  First, it demonstrates the danger in serving as a fiduciary to two companies in conflict, holding that favoring one over the other may be a breach of fiduciary duty to the disfavored entity.  Second, it awards attorneys’ fees against a party who deliberately gave remarkably evasive deposition testimony.

Tags: contract


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