In a recent Delaware Court of Chancery decision, a dispute over a further assurances clause highlighted how such boilerplate can turn a routine contract provision into a contested obligation.
Case background and contractual language
Facilities Holdings, LLC (“Operator”) and ASM Global Parent, LLC (“Vendor”) signed a master agreement granting the Vendor exclusive food and beverage rights at several sports and entertainment venues. Each venue’s concession agreement allowed a five‑year extension if the Operator were sold, subject to landlord approval.
When the Operator was sold to a competitor of the Vendor, the Vendor sought to invoke the extension provision. The Operator claimed the landlords refused consent, while the Vendor alleged the Operator had persuaded the landlords to withhold approval so the new owner could replace the Vendor with its affiliates.
Beyond the express extension language, the contracts contained a “Further Action Provision” that required each party, upon request, to execute documents and take “such further actions…necessary, proper or advisable … to effectuate the transactions contemplated by this Agreement.” The provision was framed as a “further assurances clause.”
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Court’s analysis of the clause
The court denied the Operator’s motion to dismiss both the implied covenant claim and the further assurances claim. It held that the language “required…affirmative support” for the Vendor in obtaining landlord consent. The court wrote that the clause “did not permit the Operator to seek to convince or induce a landlord to withhold its consent.”
Because the implied covenant of good faith and fair dealing only obligates a party to refrain from harmful conduct, the court found it “reasonably conceivable” that the Operator breached that duty by allegedly influencing landlords. The further assurances provision, however, imposed a positive duty to assist, making the alleged conduct sufficient to support a breach of that provision as well.
In effect, the decision treated the further assurances clause as an express version of the implied covenant’s gap‑filling function, turning a vague promise into a concrete requirement to act.
Contract practitioners often view boilerplate as harmless filler, but this case shows that language can create enforceable duties beyond mere document execution. The clause demanded not just paperwork but also actions that further the contract’s purpose, such as securing landlord consent.
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From a practical standpoint, lawyers drafting future agreements may need to clarify whether “further assurances” include only passive cooperation or also affirmative steps like lobbying a landlord. The lack of explicit language can leave parties exposed to claims that they must do more than they anticipated.
Parties might consider adding carve‑outs that limit the scope of further assurances, especially when the clause could be read to require proactive measures. Such drafting could reduce the risk of litigation over what constitutes “necessary” action.
In this particular dispute, the Operator’s alleged conduct—if true—appears to run counter to both the implied covenant and the further assurances clause. The court’s view suggests that even a standard “as and when requested” clause can carry weighty obligations.
The decision highlights the importance of reading boilerplate in context and understanding how it may interact with broader contractual duties.
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