The Delaware Court of Chancery recently analyzed an indemnification clause and performed other contract interpretation in NASDI Holdings v. North American Leasing, C.A. No. 2017-0399-KSJM (Del. Ch. Apr. 8, 2019). The court also rejected the applicability of equitable defenses to strictly legal claims.

The dispute involved the sale of a demolition and site-redevelopment company pursuant to an ownership interest purchase agreement. Under the agreement, the seller plaintiffs were obligated to maintain payment bonds secured by a letter of credit for ongoing construction projects. The purchaser eventually withdrew from one of the projects, and the surety drew more than $20 million on the letter of credit that the seller maintained. The seller demanded indemnification for their losses pursuant to the agreement, and the purchaser refused.