Francis Pileggi blogged about an interesting recent conference in which members of the Delaware bar and bench discussed "the topic of contractual definitions, or limitations, on fiduciary duties in LLCs and LPs." The post makes a number of interesting points, including a reaffirmation of what I have long understood to be the gist of Delaware law in this area:
Delaware Supreme Court decisions have upheld basic principles of contract interpretation, especially in the context of waivers of fiduciary duty, including the following: (1) Waivers need to be clear in order to be enforceable; (2) The implied covenant is not a panacea for inartful drafting of every stripe. See, e.g., Brinckerhoff decision highlighted on these pages.
I'm also intrigued by this observation:
There was a robust discussion about alternative entity agreements with provisions that provide as follows: “One is not liable if:” and then several categories of conduct are described as not resulting in liability. One judicial officer present at the seminar said that those clauses should be interpreted to mean that one is liable unless the conduct fits within the enumerated described categories that follow the phrase “… not liable if:” …”
I assume that the issue is the application of the canon of construction (applied to both statutes and contracts), expressio unius est exclusio alterius; i.e.,
The Board relies on the “interpretive canon, expressio unius est exclusio alterius, ‘expressing one item of [an] associated group or series excludes another left unmentioned.’ ” .... If a sign at the entrance to a zoo says “come see the elephant, lion, hippo, and giraffe,” and a temporary sign is added saying “the giraffe is sick,” you would reasonably assume that the others are in good health.
N.L.R.B. v. SW Gen., Inc., 137 S. Ct. 929, 940, 197 L. Ed. 2d 263 (2017).
I plan to dig into this and report back.
