August 10, 2020

Volume X, Number 223

August 10, 2020

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Amendment to Delaware Judicial Procedure Law Permits Parties to Extend Statute of Limitations for Breach of Contract Claims

Pursuant to an amendment to Section 8106 of the Delaware Courts and Judicial Procedure Law, effective as of August 1, parties to a contract may agree to extend the statute of limitations for up to 20 years for a breach of contract claim. The default rule under Delaware law provides that a general breach of contract claim is subject to a three-year statute of limitations. Prior to the amendment of Section 8106, parties to contracts could extend the statute of limitations for 20 years only by executing contracts under seal, which required parties to take specific ministerial actions in connection with the execution of the contract. Acquisition agreements often include extended survival periods beyond the default three-year statute of limitations (e.g., for breaches of “fundamental” representations and warranties and covenants), which may not have been enforceable under Delaware law prior to this amendment if not executed under seal. Under Section 8106, as amended, parties may now extend the statute of limitations without executing under seal so long as the contract involves at least $100,000 in value. Further, Section 8106 provides that the parties may agree to a statute of limitations of less than 20 years, which is not necessarily permitted if a contract is executed under seal.

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About this Author

Mark D. Wood, corporate securities lawyer Katten Muchin Chicago Law firm
Partner

Mark D. Wood is head of Katten's Securities practice and concentrates in corporate and securities law. Mark represents public companies, issuers and investment banks in initial public offerings (IPOs) and other public offerings, private investment in public equity (PIPE) transactions, debt securities and other securities matters.

Mark also represents clients in complex corporate transactions, including tender offers, mergers, acquisitions, dispositions, going-private transactions, private equity investments, joint ventures and...

312-902-5493
Martin Q. Ruhaak, Katten Muchin Law Firm, private equity transactions lawyer
Partner

Martin Ruhaak concentrates his practice on corporate matters, with an emphasis on private equity transactions, mergers and acquisitions, distressed investments and securities matters. He has represented financial sponsors and corporate clients in transactions across a variety of industries, including automotive, financial services, distribution and logistics, technology and government contracting.

312-902-5676