Delaware Supreme Court Strictly Construes Limited Partnership Agreement in Reviewing a Related Party Transaction

In Enbridge Energy Co., the Supreme Court reversed the Chancery Court’s prior decision, retreating from two prior holdings. The Court (1) reversed itself on its previously established pleading standard for bad faith, making it easier for a master limited partnership unitholder to state a claim for relief, and (2) reversed its previous interpretation of the Limited Partnership Agreement’s provisions related to affiliate transactions, which incorporated a “good faith” standard, relying instead on the rule of contract interpretation that prefers specific provisions over more general ones.

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