A recent Delaware Court of Chancery decision provides a cautionary tale about why the existence of signatures on an agreement will not always be sufficient evidence to establish that the parties intended to enter into a binding contract. In Eagle Force Holdings v. Campbell, C.A. No. 10803-VCMR (Del. Ch. Aug. 29, 2019), Justice Tamika Montgomery-Reeves, writing while she was still a vice chancellor, reasoned in a 72-page decision that based on the facts and circumstances presented during a five-day trial, two agreements that were signed by the parties were not intended to be binding contracts.

The key issue in the case was whether the parties intended to be bound by the terms of a contribution agreement and an LLC agreement that they signed. The first page at the top of the contribution agreement was marked with the word “draft,” along with the date that the draft was prepared, as well as the initials of the law firm that prepared it. The LLC agreement was an exhibit to the contribution agreement. After a thorough recitation of the extensive facts and an analysis of the applicable case law, the court determined that the circumstances surrounding the signing of the document, as well as the past practice of the parties in which they signed drafts merely to confirm receipt, rebutted the presumption that often applies to suggest that a signature on an agreement expresses assent to the terms of the agreement.

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