Agency and Choice of Law

Agency and Choice of Law

      In a decision rendered in Delaware earlier this year, there was considered the question of which law would control whether the purported agent of an LLC had actual authority to bind the company. CompoSecure, L.L.C. v. Cardux, LLC f/k/a Affluent Card LLC, C.A. No. 12524-VCL (Del. Ch. Feb. 1, 2018 as corrected Feb. 12, 2018).

      In this dispute, Vice Chancellor Laster was, amongst many other issues, called upon to determine whether New Jersey or Delaware law would apply. At issue was whether a Marketing Agreement was validly entered into. That agreement provided that it would be governed by New Jersey law. However, that agreement had been entered into by a Delaware organized LLC. As such, the question was whether New Jersey or Delaware law would apply.

      Vice Chancellor Laster determined that Delaware law would control on the basis that the existence or not of actual authority to execute the agreement on behalf of the Delaware LLC was governed, pursuant to the internal affairs doctrine, by Delaware law.