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Fraudulent Inducement Rejected as Defense to Contract Enforcement Action

By Francis G.X. Pileggi

Corkscrew Mining Ventures, Ltd. v. Preferred Real Estate Investments, Inc., C.A. No. 4601-VCP (Del. Ch. Feb. 28, 2011), read opinion here.

Short Overview: The Court of Chancery granted a motion for summary judgment to the plaintiff who sought specific enforcement of a financing agreement to purchase securities in a Delaware limited liability agreement.

Brief Highlights of Legal Principles Addressed: This relatively short decision is a useful tool for the toolbox of those who practice business litigation because in rejecting the defense of fraudulent inducement as a means to avoid enforcement of the terms of a contract, the Court also provides a roadmap not only for the elements of specific performance, but also provides direction for those who would attempt to avoid the enforcement of an otherwise valid contract based only on a "fraudulent inducement" argument. Anyone attempting to use that defense should read this opinion. In addition to applying the elements of a fraudulent inducement defense, the Court observed that the only evidentiary support of that defense was an affidavit, and the defendant did not avail itself of Chancery Rule 59(f) which allows a party presented with a motion for summary judgment to seek limited discovery to obtain facts not in its control that are needed to oppose the motion.

The Court explained that Delaware will enforce a valid contract unless there is an applicable defense. In this case, the only defense presented was rejected.

Full post as published by Delaware Corporate and Commercial Litigation Blog on March 07, 2011 (boomark / email).