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Chancery Rejects Argument To Reform Agreement Due to Unilateral Mistake

By Francis G.X. Pileggi

Cambridge North Point LLC v. Boston and Maine Corp., Del. Ch. (June 17, 2010), read opinion here.

This 47-page opinion from the Delaware Court of Chancery deals with the attempt of one party to be relieved from obligations under a Settlement Agreement based on alleged unilateral mistake or misrepresentation. Because the law of Massachusetts controlled, we will only cursorily highlight this case.

Key Issue
Although there are many factual and legal aspects of this decision, the key issue that we will limit this overview to, is the attempt of one party to use the arguments of unilateral mistake and misrepresentation to be relieved of a provision in an agreement that the party argued was 'quietly slipped in' to the final version of the agreement without them noticing the difference from prior drafts. The Court rejected the arguments and required the agreement to be complied with in full.

Overview
On a factual level, this opinion is unpleasant to read because the arguments are based on the apparent omission by well regarded attorneys who did not notice a major new provision in the last version of an agreement. The Court was unsympathetic and in essence rejected the arguments that attempted to rely on misrepresentation or unilateral mistake as an excuse for not being obligated to the terms that were apparently missed in the final version.

The agreement at issue was the second Settlement Agreement to settle litigation between the parties. The first settlement agreement was also the subject of specific performance proceedings and prior to the hearing on that Motion to Enforce, the parties arrived at their second Settlement Agreement. The same party who sought to be relieved of the provisions of the second agreement, acknowledged that if it was enforceable, then they breached it. The Court referred to the reformation and unilateral mistake arguments as 'spurious' and in part for that reason, as well as other similar conduct, the Court awarded attorneys' fees to the prevailing party.
 

Full post as published by Delaware Corporate and Commercial Litigation Blog on June 18, 2010 (boomark / email).