Delaware Fee-Shifting Bill Shelved For 2014

A joint resolution of the Delaware State Senate and House of Representatives, with the approval of Governor Markell, has shelved a bill to ban Delaware stock corporations from adopting bylaw provisions to shift attorneys’ fees and expenses in corporate litigation to unsuccessful plaintiffs.

The bill was drafted and approved by the Delaware State Bar Association and presented to the General Assembly following the May 8, 2014, en banc response of the Delaware Supreme Court to certified questions of law from the U.S. District Court for the District of Delaware in ATP Tour, Inc. v. Deutscher Tennis Bund (German Tennis Federation), et al., No. 534, 2013 (Del. May 8, 2014). The Supreme Court stated in ATP that a “fee shifting” bylaw provision in a non-stock corporation’s bylaws “can be valid and enforceable under Delaware law.” The bylaw at issue would shift the company’s defense fees and costs to a member who had sued the company (or any other member) and was unsuccessful in “substantially achiev[ing], in substance and amount, the full remedy sought” in the litigation.

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Amendments to Delaware LLC and Partnership Acts Pass House

Proposed changes to Delaware’s alternative entity statutes, including amendments providing greater flexibility in finance and other transactions, were passed unanimously by the state House of Representatives on June 10, 2014.

The proposed amendments to the Limited Liability Company Act, 6 Del. C. §§ 18-101, et seq. (LLC Act), the Revised Uniform Limited Partnership Act, 6 Del. C. §§ 17-101, et seq. (LP Act) and the Revised Uniform Partnership Act, 6 Del. C. §§ 15-101, et seq. (GP Act), if approved by the Senate and Governor Markell, by their own terms will become effective on August 1, 2014.

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Proposed Amendment to Delaware Statute of Limitations Would Extend Time for Contract Claims to 20 Years (Without Seal)Proposed Amendment to Delaware Statute of Limitations Would Extend Time for Contract Claims to 20 Years (Without Seal)

A proposed amendment to the Delaware statute of limitations for contract claims should go a long way toward eliminating uncertainty in parties’ attempts to extend limitations periods by written agreement or by entering into contracts under seal. Parties generally cannot extend (or waive) a statutory limitations periods by agreement, and the requisite formalities required to enter into contracts under seal can be easily botched due to a lack of guidance and inconsistent caselaw. The amendment would allow parties to extend the limitations period in writing to up to 20 years and would only apply to contracts involving at least $100,000.

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Welcome to the Duane Morris Delaware Business Law Blog

The lawyers of the Wilmington, DE, office of Duane Morris LLP are pleased to announce the launch of a new blog designed to highlight developments in all aspects of Delaware Business Law. Readers who follow the blog will receive timely reports on: (1) important new opinions from the Delaware Supreme Court, Delaware’s Court of Chancery, and the Complex Commercial Division of the Superior Court; (2) announcements and analysis of amendments to Delaware’s General Corporation Law and alternative-entity statutes; (3) important developments in IP law from the U.S. District Court for the District of Delaware; and (4) news from Delaware’s Bankruptcy Court.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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