United Rentals, Inc. v. RAM Holdings, Inc.
Court of Chancery of Delaware
937 A.2d 810 (2007)
During merger negotiations, URI's (plaintiff) counsel pushed for a specific-performance mechanism while RAM's (defendant) counsel repeatedly communicated that Cerberus (RAM's principal) would only proceed if guaranteed the option to walk away by paying a $100 million penalty, and RAM struck draft provisions expressly granting specific performance; the finalized contract contained a facially conflicting structure -- Section 9.10 granting specific performance rights subject to Section 8.2(e), which made the $100 million penalty the exclusive remedy and precluded equitable relief. URI sued for specific performance and moved for summary judgment.
Whether, where a contract's meaning is ambiguous, the subjective understanding of one party may bind the other party when that other party knows or should know of that understanding.