Confidentiality Agreements Under Delaware Law

Red Fish Kitchen > Confidentiality Agreements Under Delaware Law
  • Date: September 15, 2021
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The RAA case serves as a reminder that while due diligence is an instrument to help buyers evaluate a potential transaction, buyers should not rely on statements or materials provided by a seller during due diligence. Many confidentiality agreements preserve the seller`s ability to limit its liability in terms of quantity, quality and date of disclosure during the due diligence process, perhaps even in the event that the seller makes fraudulent or misleading statements. Before responding to Martin Marietta`s allegations of error, the Supreme Court rejected Martin Marietta`s proposal that the Court of Opportunity had turned confidentiality agreements into status quo agreements. The Supreme Court has found that status quo agreements and confidentiality agreements are different; A standstill agreement expressly prohibits the parties from having control over the other in any given way (usually a hostile offer and/or proxy contest to remove directors) and does not require or depend on one party using or disclosing the other party`s non-public information. On the other hand, a confidentiality agreement does not prevent a party from making an offer hostile to the other party as long as the offer does not involve the use or disclosure of non-public information of the other party. Confidentiality agreements did not contain standstill clauses and were not status quo agreements. Next, the Supreme Court upheld the Court of Chances` finding that Martin Marietta had violated the NDA`s plain language by disclosing non-public information, due to the lack of an external request that led to the “statutory” disclosure exception and because Martin Marietta did not comply with the NDA`s notification rules for disclosure. Finally, the Supreme Court upheld the injunction issued by the Court of Justice. 2. Document deliberations carefully. Given the ambiguity of some of the fundamental contractual languages that have been verified by the Court, Registrar Strine has often resorted to the verification of extrinsian evidence, including board documents, internal memoranda, handwritten notes and bankers` presentations. These documents eventually allowed him to conclude that, when entering into the confidentiality agreements, the parties – in particular Martin Mariettas – intended to strictly limit their ability to disclose confidential information. .

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