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Delaware Courts Interpret Survival Clauses Relating to Contractual Representations

January 2014, Kevin R. Shannon and Berton W. Ashman, Jr.

The Delaware Court of Chancery has issued two recent decisions—GRT, Inc. v. Marathon GFT Technology, Ltd. and ENI Holdings, LLC.v. KBR Group Holdings, LLC—holding contract indemnification claims to be time-barred because the litigation was not commenced before the representations at issue terminated. The decisions, which interpreted indemnification and survival provisions similar to those found in many merger or stock/asset purchase agreements, are significant for both deal lawyers and litigators. Among other things, in contrast to some prior cases, the court held that it was not sufficient to provide “written notice” of a claim prior to the termination date. Rather, based on the contract provisions at issue, the court held that a party must commence litigation prior to the termination date of the representations at issue or the claim will be barred.

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