"Contracting For Irreparable Harm May Not Be As Effective As You Think"

In the widely-watched case of Martin Marietta Materials, Inc. v. Vulcan Materials Co., No. 254-2012 (Del. July 10, 2012), the Supreme Court of Delaware upheld the Chancery Court's ruling that temporarily enjoined Martin Marietta from engaging in a hostile takeover of Vulcan. The Chancery and Supreme Courts' opinions have rightfully garnered significant attention in corporate and legal circles. However, one aspect of the opinions that has been largely overlooked highlights an underappreciated distinction between Delaware and federal law involving the movant's burden in seeking injunctive relief for breaches of contract.

Before issuing a temporary restraining order (''TRO'') or preliminary injunction, Delaware state courts and all federal courts require a movant to demonstrate that it will suffer ''irreparable harm'' if the court does not issue an injunction pending trial. To account for this requirement and add predictability in the event of a breach, it has become