Main Content

An Introduction to the Law of Corporations: Cases and Materials

Malpiede v. Townson

The effect of ยง102(b)(7) provisions on litigation is significant. Exculpation provisions eliminate the monetary liability of directors for violations of their duty of care. Consequently, if a plaintiffs alleges only that directors violated their duty of care and that caused them some damage, there is no remedy available at law for these plaintiffs. Where the court is unable to provide a remedy, judicial economy requires that a case be dismissed. In Malpiede, the Delaware courts encounter just such a situation. The result is not surprising: a duty of care claim is dismissed for failure to state a claim for which there is a remedy available.