Opinion ID: 2273949
Heading Depth: 1
Heading Rank: 5

Heading: Exception For Contract Under Seal

Text: The Court of Chancery noted, however, that one exception to the three-year statute of limitations for contract actions specified in title 10, section 8106 is for contracts under seal, for which the common law twenty-year period applies. [21] In the Court of Chancery, Frank argued that the AIP is a contract under seal. In support of his argument, Frank noted that the word seal appears in typed letters beside the signature line for each signatory of the AIP. The Court of Chancery ruled that while documents of debt, such as mortgages or promissory notes, escape the three-year limitation if they contain the most minimal reference to a seal, actions arising from other types of contracts must show a clearer intent to enter into a contract under seal. In support of that ruling, it relied upon the case of American Telephone & Telegraph Co. v. Harris Corp., [22] where the Superior Court held: In Delaware, for an instrument other than a mortgage to be under seal ... it must contain language in the body of the contract, a recital affixing the seal, and extrinsic evidence showing the parties' intent to conclude a sealed contract. ... The mere existence of the corporate seal and the use of the word seal in a contract do not make the document a specialty. [23] Because the AIP is neither a mortgage nor a promissory note, the Court of Chancery concluded that a number of the cases Frank relied upon were inapposite. The record reflects that the AIP contains no reference to a seal other than the printed word seal next to each signature. The Court of Chancery held that evidence is insufficient to demonstrate an intent of the parties to enter into a sealed contract. Accordingly, it reiterated its holding that the three-year statute of limitation for contracts applies by analogy in this case.