Implications of Recent Court of Chancery Decisions on MLP Related Party Transactions

Introduction

In two recent decisions written by Vice Chancellor Travis Laster, the Delaware Court of Chancery provided helpful judicial guidance on the application of the covenant of good faith in the context of related party transactions involving master limited partnerships (MLPs).  In both decisions, the Court made clear that when dealing with limited partnerships, contractual terms control and that, once fiduciary duties are contractually eliminated as permitted by Delaware law, courts should not imply terms that would alter the contract or attempt to reconstruct outcomes that fiduciary duty analysis in the corporate setting would generate.

An MLP is a publicly … Read more