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Court Of Chancery Explains Good Faith Dealing Applications

Posted In M&A

American Capital Acquisition Partners LLC v. LPL Holdings Inc., C.A. 8490-VCG (February 3, 2014)

Disappointed parties to merger or asset purchase agreements sometimes try to get a redo of their deal by arguing the other side has violated the duty to act fairly and in good faith in the course of implementing their transaction. This decision explains when that will not work and when it may succeed. If the parties contracted with respect to the subject the plaintiff is complaining about, it will do little good to try to cast its complaint as a matter of fair dealing. It instead should have done a better job of contracting. On the other hand, when the matter in dispute was not focused on by the parties in their deal, they have a better chance of having the Court fill the gap with a fair dealing and good faith analysis.

Tags: M&A
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