In a recent decision, the Delaware Chancery Court dismissed Count II of the complaint filed by Trifecta Multimedia Holdings Inc. against WCG Clinical Services LLC. The Company alleged that WCG breached the implied covenant of good faith and fair dealing by deliberately hindering the Company's ability to achieve certain revenue milestones. However, the court found that the claim did not meet the necessary legal standards to proceed.

The Delaware Supreme Court has established that the implied covenant is a fundamental aspect of all contracts, used to address unforeseen developments or gaps that neither party anticipated. It requires proof that one party acted arbitrarily or unreasonably, thereby frustrating the other party's reasonable expectations from the contract. In this case, the court emphasized that to plead an implied covenant claim successfully, the plaintiff must show a specific implied contractual obligation, its breach by the defendant, and resulting damages.

In examining the case, the court first sought to determine if there was a contractual gap that needed to be filled by the implied covenant. The court found that the contract explicitly covered the issue, thereby negating the need for an implied term. Additionally, the court noted that the plaintiff's claim failed because the requested term was explicitly discussed and rejected during negotiations. The rejection was not because of disagreement on the obligation, but because WCG's lawyer believed Delaware law already incorporated the obligation through the implied covenant.

The court also considered whether the pled facts supported an alternative legal theory, such as fraud. However, the plaintiffs did not provide sufficient evidence to suggest that WCG's attorneys knowingly made false statements about the implied covenant. Consequently, the court concluded that Count II did not state a claim for which relief could be granted and dismissed the claim. This ruling underscores the importance of clearly established contractual terms and the limits of the implied covenant in addressing unanticipated issues within a contract.