Sinclair Oil Corp. v. Levien
Delaware Supreme Court
280 A.2d 717 (Del. 1971)
Relevant factsFree
Sinclair (defendant), owning about 97% of subsidiary Sinven (plaintiff), caused Sinven to pay out $108 million in dividends exceeding its earnings, and separately caused Sinven to contract exclusively with another Sinclair subsidiary, International, which then chronically underpaid late and failed to meet minimum purchase requirements; Sinven sued for both the dividend policy and the contract breach, and the Court of Chancery applied intrinsic fairness review and ruled for Sinven on both claims.
IssueFree
Whether a parent corporation must always satisfy the intrinsic fairness test when transacting business affecting its subsidiary.