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Chancery Distinguishes Between Promise and Condition in Contract to Deny Indemnification Claim

By Francis G. X. Pileggi, Esq.

pIn emTravelCenters of America LLC v. Brog,/emnbsp; (Del. Ch., Dec. 5, 2008), read opinion a href="http://courts.state.de.us/opinions/(ytf05e45y0zg1kjiprfa0x55)/download.aspx?ID=114740"here,/a the Chancery Court denied a claim for indemnificationnbsp;based on the argument that the provisionsnbsp;ofnbsp;the parties' LLCnbsp;agreement. were breached.nbsp;The Court reached this conclusion notwithstanding its reasoningnbsp;in an earlier opinion that the notice provisions of the agreement were not complied with in connection with expressions of interest to nominate a person to the board of directors of the LLC pursuant to the procedures required in the agreement./p pThe Court determined that the notice provisions that were violated were strongconditions/strong and uemnot/em/ustrongnbsp;nbsp;promises/strong. Thus, in light of the agreement not obligating the defendant to assure that the conditions would occur--as compared to a provision that is a promise to perform, there was no entitlement to remedies for breachnbsp;of nbsp;the non-occurrence on the condition. Therefore, there was no right to indemnification that would otherwise apply to the breach of a promise in the agreement./p pThree prior decisions in this case were summarized a href="http://www.delawarelitigation.com/admin/mt-xsearch.cgi?blog_id=296amp;search_key=keywordamp;search=TravelCenteramp;Search.x=9amp;Search.y=2"here./a/pimg src="http://feeds.feedburner.com/~r/DelawareCorporateAndCommercialLitigation/~4/491838482" height="1" width="1"/

Full post as published by Delaware Corporate and Commercial Litigation Blog on December 21, 2008 (boomark / email).