On March 5, 2021, the Delaware Supreme Court declined to use the implied covenant of good faith and fair dealing to rewrite contracts. The implied covenant bars contracting parties from exploiting each other in ways that could not possibly have been foreseen when the contract was signed. Delaware’s courts sometimes say, however, that the implied covenant can be used to create new terms the parties could have, but did not, think to place in their contract. In this case, a trial court let a jury add such terms to a contract involving drug-patent royalties. WLF submitted a brief arguing that the judgment should be reversed. Especially where, as in this case, the contract at issue is an agreement between sophisticated companies, a court’s core assumption should be that parties can, and may be expected to, negotiate for what they want and then write it down. WLF is grateful to Nicholas E. Skiles, of Swartz Campbell LLC, for his pro bono assistance with the submission of WLF’s brief.
Documents:
