Court of Chancery Interprets Delaware APA’s Forum Selection Clause Containing Both Mandatory and Permissive Language

06.2026

This article was originally published the June 2026 issue of Month-in-Brief: Mergers & Acquisitions, a publication of the Business Law Section of the American Bar Association.

In a recent decision, Kelly Roofing Holdings, LLC v. Flores, C.A. No. 2025-1049-BWD (Del. Ch. June 4, 2026), the Court of Chancery enforced a Delaware forum selection provision contained in an asset purchase agreement, finding the forum selection clause to be mandatory rather than permissive. The forum selection clause stated that an action arising out of the asset purchase agreement or the transactions contemplated thereby “may be instituted” in a Delaware federal or state court, and each party “irrevocably submits to the exclusive jurisdiction of such courts in any such” action.

On January 15, 2025, plaintiffs entered into an Asset Purchase Agreement (“APA”) under which defendants agreed to sell to plaintiffs the assets of Integrity Roofing and Gutters, Inc., a Florida corporation that repairs roofs and gutters for commercial and residential buildings. After executing the APA, plaintiffs allegedly discovered that defendants failed to disclose material liabilities, litigation, contracts and a fraudulent invoicing, bribery, and kickback scheme. At the same time as entering into the APA, plaintiffs entered into an employment agreement with defendant Chantelle A. Flores to govern the terms of Flores’s employment as president of the acquired business after the transaction. Thereafter, plaintiffs sued individual defendant Flores under the employment agreement in Florida and then brought this action in Delaware for, among other things, fraudulent inducement with respect to the APA.

Defendants move to dismiss the Delaware complaint, arguing that (1) the Court should defer to the first-filed action in Florida, and (2) the APA’s forum selection provision, under which the parties agreed to submit to the “exclusive jurisdiction” of the Delaware courts, was not mandatory because it stated that an action arising from the APA “may be instituted in the federal courts of the United States of America or the courts of the state of Delaware” (emphasis added). The Court disagreed with the defendants, citing prior decisions that found that any permissive language related only to whether the action is filed in state or federal court while the reference to “exclusive jurisdiction” plainly made the provision mandatory.

Lisa R. Stark  brings more than two decades of experience guiding companies through complex corporate transactions and strategic decisions involving Delaware corporate law. Her practice spans mergers and acquisitions, IPOs, proxy contests, asset sales, stock issuances and hostile takeovers. She advises both public companies and private equity funds and their portfolio companies in connection with mergers and acquisitions. She also counsels both public and private companies on corporate governance matters, including Delaware fiduciary duties, and the General Corporation Law of the State of Delaware.