We wrote recently about two cases interpreting contractual survival clauses under Delaware law. The cases—GRT v. Marathon GTF Technology, C.A. No. 5571-CS (Del. Ch. Jul. 11, 2011), and ENI Holdings v. KBR Group Holdings, C.A. No. 8075-VCG (Del. Ch. Nov. 27, 2013)—held that provisions limiting the period of time in which representations and warranties survive closing act as a statute of limitations on the nonbreaching party’s ability to commence litigation for breach. The two cases also hold some other important lessons regarding the interpretation and effect of survival clauses that may surprise practitioners who are not familiar with them.
In Marathon, then-Chancellor Leo E. Strine Jr. wrote that there were four distinct ways to address the duration of contractual representations and warranties: the contract can provide that the representations and warranties terminate at closing; the contract can be silent on whether the representations and warranties survive closing or expire upon closing; the contract can provide a definite period during which the representations and warranties survive closing; or the contract can provide that the representations and warranties survive indefinitely.
