Court of Chancery Denies Reformation
Psilos Group Partners, L.P. v. Towerbrook Investors L.P., C.A. No. 1479-N (Del. Ch. January 17, 2007).
When the terms of a contract do not quite cover what one party, in retrospect, wished was included, there is a great temptation to argue the court should rewrite the deal to include what the disappointed party wants. Naturally, the courts reject such attempts, as in this case, when the other party to the contract objects to its rights being altered after the fact. This case illustrates this scenario. The court's method of analysis included not just reviewing the contract terms, but understanding the economics behind the deal. These facts show that the "reformation" the plaintiff sought would not have been agreed to had the parties thought about it when the contract was signed. That is important in denying the claim to change the contract terms, absent fraud or mistake.This opinion also includes a discussion of what is an "affiliate" and "drag along rights", two terms that have been the subject of some debate in the past.