Ambiguity In Redemption Agreement Keeps Alive Question As To Confidentiality Obligation Under Operating Agreement

A recent decision from the Delaware Chancery Court highlights how imprecise drafting can lead to disputes over what obligations are and are not owed. UtiliSave, LLC v. Miele, C.A. No. 10729-VCP, 2015 WL 54558960 (Del. Ch. Sept. 17, 2015).

The Utilisave, LLC operating agreement contained a confidentiality agreement that would "continue to be binding on a Member following the termination of its interest in the Company." Miele, an employee with access to Utilisave's confidential and proprietary information, became a member of the company and in so doing became subject to the confidentiality provision. Thereafter her interest in the company was cancelled pursuant to an Assumption and Termination of Membership Interest agreement that was silent as to the confidentiality obligation under the operating agreement. It did, however, expressly cut off Miele's obligation to contribute further capital to the company.