By Seth Cleary

Because Delaware is the choice of law used in a majority of M&A deals, certainty in default rules is a necessity for its contractarian approach to corporate law. As such, the new uncertainty from Eagle Force Holdings, LLC v. Campbell, if left unclarified by the Supreme Court of Delaware, could create higher transaction costs for negotiating future M&A deals and distortions in deal prices—an undesirable result for a state whose business has become corporate law.

Thus, the primary aim of this paper will be two-fold: first, to summarize the existing legal thought about contract claims in Delaware and cases with these types of claims, and second, to recommend a rule for Delaware courts to adopt. Within this recommendation, the paper will predict how the court is likely to rule, as well as put forth a framework, through use of a penalty default, in order to reach an optimal default rule.

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Recommended Citation
Seth Cleary, Comment, Delaware Law, Friend or Foe? The Debate Surrounding Sandbagging and How Delaware’s Highest Court Should Rule on a Default Rule, 72 SMU L. Rev. 821 (2019).