04/21/2010

Corporate Finance Alert: Word "Seal" Extends Statute of Limitations to 20 Years in Delaware

While Delaware has a three-year statute of limitations generally applicable to contracts, a 20-year statute of limitations applies to contracts under seal. In Whittington v. Dragon Group, L.L.C., 2009 WL 4894305 (Del.Supr.), the Delaware Supreme Court addressed for the first time what evidence is necessary to establish a contract under seal. In the case of an individual, as opposed to a corporation, the presence of the word "seal" next to an individual's signature will create a sealed instrument, even if the body of the contract does not express that intent. Unlike Delaware, most states (including Kansas and Missouri) have abolished the common law of contracts under seal.