Delaware Business Litigation Report

Court of Chancery Clarifies Pleading Rules

Cypress Associates LLC v. Sunnyside Cogeneration Associates Project C.A. No. 1607-N (Del. Ch. January 17, 2007).

It is often plead that a party to a contract has acted unreasonably in withholding consent if the contract requires for the other party to take certain action. This decision holds that such a pleading, even as an affirmative defense where vagueness is a tradition, must state facts that support the claim. The opinion is also enlightening in applying long settled corporate law principles that a party to a contract has the right to act in its own self-interest in exercising its contractual rights.

Delaware courts read contracts in the context of the business deal in which the contract was made to enforce. Thus, in arguing for a contractual interpretation, grounding that argument in the business operations that the contract addresses, is always a good idea. Share