What Does My Signature Page Attach To? An Important Lesson in Contracting
In Braga, an investor sought to rescind an agreement and recoup its investment based on a fraudulent inducement theory after the investor's relationship with the deal sponsor turned sour. The Delaware Court of Chancery refused to undo the transaction and the investor was left with several expensive lessons in deal making.
December 06, 2023 at 09:00 AM
6 minute read
ContributorsIt is very common for dealmakers to want to quickly close the deal and sometimes the rush to the proverbial closing table may cause unwary dealmakers to ignore the fundamentals. The Delaware Court of Chancery's decision in Braga Investment & Advisory v. Musa Yenni, highlights the importance of following contracting fundamentals. In Braga, an investor sought to rescind an agreement and recoup its investment based on a fraudulent inducement theory after the investor's relationship with the deal sponsor turned sour. The Delaware Court of Chancery refused to undo the transaction and the investor was left with several expensive lessons in deal making.
First, Braga reminds us to read the deal documents before providing signature pages and to condition the release of signature pages on a final review of the relevant document. It seems elementary, but the investor's failure to read an agreement was a critical factor in the court's decision. While many people look to the court as a source of relief, the court has consistently reiterated that it will not save a party from a bad deal. In fact, in the absence of fraud or an illegality, the court will likely compel the parties to honor their obligations under the agreement. Given the increasing use of DocuSign and other remote technology, the fundamental concept of "read before signing" remains relevant in our everyday dealings and, most importantly, understanding which document an investor's signature page will be attached to.
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