The M&A community is abuzz about Meso Scale Diagnostics, LLC v. Roche Diagnostics GmbH, a recent Delaware Chancery Court opinion in an ongoing breach of contract dispute involving a reverse triangular merger (an “RTM”). In the opinion, Vice Chancellor Parsons denied defendants’ motion to dismiss plaintiffs’ breach of contract claim, because the court determined that an anti-assignment provision in a contract between the parties was ambiguous as to whether consent was required in the context of an RTM. This potentially far-reaching opinion may impact the way parties structure future deals as well as conduct business and legal due diligence during transactions. This case may also encourage parties to seek legal redress for potential breaches of anti-assignment provisions of contracts resulting from RTMs.
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In a recent Delaware Chancery Court opinion, Cambridge North Point LLC v. Boston and Maine Corporation, Vice Chancellor Strine refused to find a contract unenforceable where B&M argued it had signed the agreement “without noticing” changes made by Cambridge.
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In One Communications Corp. v. JP Morgan, the Second Circuit Court of Appeals considered the application of a “non-reliance” clause in an acquisition agreement. A non-reliance clause is a provision providing that the buyer is not relying on any representations or warranties regarding the subject matter of the acquisition agreement except for the representations and warranties contained in the agreement itself. This provision is typically requested (if at all) by counsel to the acquisition target.
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The Delaware Court of Chancery recently provided important guidance to practitioners drafting release agreements. In CorVel Enterprise Comp., Inc. v. Schaffer, the parties contested the scope of a release executed to resolve a dispute over an earn-out provision in a stock purchase agreement. At issue was whether the release agreement was limited to the subject matter of the earn-out provision or also released the parties’ obligations under a noncompetition agreement executed several years prior to the release, at the time the stock purchase agreement was entered into. The release stated, in pertinent part, that CorVel “fully releases” Schaffer from “any and all claims … including without limitation, any claims … arising out of any relationship between [Schaffer] and CorVel, including but not limited to any claims or counterclaims that were or could have been asserted in the Pending Case.” The “Pending Case” referred to the earnout dispute. The court held that the release was broad enough as a matter of law to “fully encompass[] the entire breadth of the relationship between” the parties.
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