Delaware Law On Confidentiality Agreements

The FALL RAA reminds us that, while due diligence is a tool to help buyers assess a potential transaction, buyers should not rely on statements or materials provided by a seller during due diligence. Many confidentiality agreements preserve the seller`s ability to limit liability in terms of quantity, quality and disclosure date during the due diligence process, perhaps even in the event that the seller provides fraudulent or misleading information. A Chancery master`s degree submitted a report in July 2018 recommending indefinite confidentiality until the shareholder commenced an action on the basis of the inspection, according to which confidentiality would be controlled by the current judicial rules. This call followed the purpose of the master`s report. – The reflection of the consequences of the delaware Chancery- Supreme Court decisions at Vulcan v. Martin-Marietta, “Conditions of Use,” has changed considerably over the period under review. The 2014 terms of use give a general idea of how confidential information should be used, but do not give a precise direction, as does the language in question to Marietta/Vulcan. On the other hand, the conditions of use for 2018 are more uniform and more specific. In six of the nine ANN 2018, confidential information will be used “exclusively for purposes” or “only related” to the valuation of a proposed transaction. These six agreements also list activities that constitute an evaluation. In this case, this was the first request for books and records in accordance with Section 220 in December 2014. The main issue was the scope and duration of a confidentiality agreement required by the company. A second Section 220 request was submitted in February 2017 and, once again, the parties failed to reach an agreement on the terms of a confidentiality agreement.

In October 2017, a complaint was filed with the Court of Chancery requesting access to books and records on the basis of an amended application in May 2017. The main point of contention between the parties was always the extent of the confidentiality obligations that the company imposes on its issue production. Although the shareholder also requested non-confidential documents, the company was outraged. The second lesson is that, whatever the Supreme Court`s decision, remember that a confidentiality agreement or confidentiality agreement is first and foremost a contract, and the legal lens that should be used in the development of a confidentiality agreement is the applicable jurisdictional contract law. In his decision, the Chancery judge emphasized this both explicitly and analytically. This is an obvious point, and any lawyer, who has worked on confidentiality agreements, will no doubt say that contract law is the main applicable legal discipline, but in practice there is a lot of boilplate use and relaxation in the NDA assembly, often because business clients tend to “fill in empty forms” and get angry, not about the terms of the contract, but in the “delay” caused by lawyers in obtaining these “harassment” agreements.

This entry was posted in Uncategorized. Bookmark the permalink.