Case Citation
Legal Case Name

United Rentals, Inc. v. RAM Holdings, Inc. Case Brief

Court of Chancery of Delaware2007Docket #1395762
937 A.2d 810 2007 WL 4496338 2007 Del. Ch. LEXIS 181 Contracts Corporations Mergers & Acquisitions

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Case Brief Summary & Legal Analysis

General Brief
4 min read

tl;dr: A buyer in a merger sought to pay a $100 million termination fee to exit the deal. The seller sued for specific performance. The court found the contract ambiguous and, applying the forthright negotiator principle, denied specific performance, holding the fee was the exclusive remedy.

Legal Significance: Establishes the “forthright negotiator principle” in Delaware contract law. When a contract is ambiguous, a party’s subjective understanding, if known or should have been known by the other party, can determine the contract’s meaning, especially if the other party fails to clarify its disagreement.

United Rentals, Inc. v. RAM Holdings, Inc. Law School Study Guide

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Case Facts & Court Holding

Key Facts & Case Background

United Rentals, Inc. (URI) agreed to be acquired by RAM Holdings, Inc. (RAM), a shell entity created by private equity firm Cerberus. The Merger Agreement contained conflicting provisions regarding remedies. Section 9.10 explicitly granted URI the right to seek specific performance to compel the merger’s consummation. However, it also stated it was “subject in all respects to Section 8.2(e).” Section 8.2(e) capped RAM’s liability at a $100 million termination fee and, in a key sentence, stated that “in no event shall the Company seek equitable relief.”

During negotiations, URI’s counsel initially drafted strong specific performance rights. RAM’s counsel repeatedly struck these provisions and insisted on a “walk-away” right limited to the termination fee. In a pivotal late-stage negotiation, after URI’s counsel deleted the “no equitable relief” language, RAM’s counsel insisted it be reinserted, explaining its importance. URI’s counsel acquiesced, stating, “I get it.” When market conditions soured, RAM repudiated the agreement, offering to pay the $100 million fee. URI sued for specific performance, arguing the contract permitted it. RAM contended the fee was the sole and exclusive remedy.

Court Holding & Legal Precedent

Issue: Where a merger agreement contains ambiguous and directly conflicting provisions regarding the availability of specific performance, may a court look to extrinsic evidence and the forthright negotiator principle to determine whether the parties intended for a termination fee to be the sole and exclusive remedy?

Yes. The court denied the petition for specific performance, holding that the Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id es

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Legal Issue

Where a merger agreement contains ambiguous and directly conflicting provisions regarding the availability of specific performance, may a court look to extrinsic evidence and the forthright negotiator principle to determine whether the parties intended for a termination fee to be the sole and exclusive remedy?

Conclusion

The case serves as a critical precedent on the use of the Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in

Legal Rule

When contract provisions are ambiguous, a court may consider extrinsic evidence to Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit an

Legal Analysis

The court began by finding the Merger Agreement facially ambiguous. Section 9.10 Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occa

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Flash Summary

  • The court denied specific performance of a merger agreement, limiting the
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id e

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