Delaware law has long permitted parties to a contract to limit remedies for a breach of that contract. But many attorneys believed that no matter what the contract said, a remedy for acting in bad faith still survived and permitted a suit to enforce that remedy. That is still true, but only barely. For, as a recent Court of Chancery decision shows, even a claim for acting in bad faith may be severely limited.
This legal result began by at least by 2002. In that year, the Delaware Supreme Court suggested inGotham Partners v. Hallwood Realty Partners , 817 A. 2d 160 (Del. 2002), that perhaps the parties to a limited partnership might be able to contract away "traditional notions of fiduciary duties." The Delaware General Assembly readily agreed, by amending the Delaware Limited Partnership Act to expressly permit waivers of any fiduciary duties owed by a general partner to the limited partner investors. Only the duty to act in good faith could not be waived under the Limited Partnership Act or the Limited Liability Company Act.
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