This article is Part XIII of the Musings on Contracts series by Glenn D. West, which explores the unique contract law issues the author has been contemplating, some focused on the specifics of M&A practice, and some just random.
It could simply be the Baader-Meinhof phenomenon (i.e., the “frequency illusion”), but I seem to be running into the implied covenant of good faith and fair dealing at every turn lately.[1] Indeed, in a recent Delaware Court of Chancery decision, Facilities Holdings, LLC v. ASM Global Parent, LLC,[2] an express version of the implied covenant was invoked via a standard boilerplate provision—the “further assurances clause.”
While further assurances clauses are generally used to obtain an additional document necessary to fully evidence a transfer of assets in connection with the closing of a sale and purchase transaction,[3] they are not necessarily limited to that purpose,[4] particularly when they appear in an agreement governing an ongoing relationship.
Further assurances clauses have generally been described as “catchall contract provision[s] by which a party, after making a precise commitment to perform in some manner, makes a vague, more general commitment to take other actions that are incidental to, and necessary for, the performance of the core commitment.”[5] While “[s]uch a provision does not create a new obligation,”[6] it may require parties to take additional actions that are consistent with the other express terms of the contract. One commentator has even described a further assurances clause as follows:
A further assurances provision is the exclamation point on the parties’ agreement. In the other parts of the agreement, the parties define their mutual objectives and detail their specific commitments to each other. By contrast, a further assurances provision is a general provision designed to require the parties to exercise a certain degree of effort to achieve the agreement’s overall objectives. It recognizes that parties do not and cannot contemplate and draft for every contingency. Thus, the further assurances provision serves as a gap filler and a back stop.[7]
If that sounds a bit like an express version of the implied covenant’s gap-filling function,[8] it should. One court has even suggested that “how other courts interpret the obligation to behave in good faith may suggest how a court should interpret the language contained in the Agreement’s further assurances clause.”[9]
In Facilities Holdings, the operator and lessee (“Operator”) of certain sports and entertainment venues entered into a concession agreement for each venue and a master agreement covering all venues with the vendor (“Vendor”), who was granted the right to be the exclusive food and beverage vendor at the venues. Each concession agreement provided that if the Operator was sold to a third party, the term would be extended by five years, subject to the approval of the landlord of the applicable venue.
When the Operator was sold to one of the Vendor’s competitors, the Vendor sought to extend the term of the concession agreements as contemplated by their express provisions. The Operator, however, claimed that the landlord of each venue had refused to approve the extension.
But the Vendor claimed “that behind closed doors, the Operator convinced the landlords to withhold consent so the Operator could replace the Vendor with affiliates of the new owner.”[10] The Vendor alleged that the concession agreements and the master agreement contained an implied covenant of good faith and fair dealing that required the Operator “not to intentionally undermine the landlord’s willingness to consent, such as by advocating that the landlord withhold its consent.”[11]
The Vendor did not suggest that the implied covenant required the Operator “to use affirmative efforts to obtain landlord consent.”[12]
The Vendor claimed, however, that the Operator had breached the express terms of the further assurances clause. That clause (labeled as a “Further Action Provision”) stated:
Subject to the terms and conditions provided in this Agreement, following the date hereof each of the parties shall, as and when requested by another party hereto, execute and deliver, or cause to be executed and delivered, such further certificates, instruments and other documents, and to take, or cause to be taken, such further actions, as may be necessary, proper or advisable under applicable law to evidence and effectuate the transactions contemplated by this Agreement.[13]
Unlike the implied covenant claim, the further assurances claim suggested the Operator had an affirmative obligation to assist the Vendor in obtaining the landlord’s consent.
The Delaware Court of Chancery denied the Operator’s motion to dismiss both claims:
Here, an obligation to “take, or cause to be taken, such further actions, as may be necessary, proper or advisable under applicable law to . . . effectuate the transactions contemplated by this Agreement” required that the Operator provided some level of support for the Vendor in obtaining landlord consent for its extension request. The Further Action Provision did not permit the Operator to seek to convince or induce a landlord to withhold its consent.
For the same reasons that it is reasonably conceivable that the [Operator] breached the implied covenant, it is reasonably conceivable that the [Operator] breached the Further Action Provision. The former only required neutrality and non-harm, yet the Complaint supports an inference that the Operator breached that obligation by engaging in harmful conduct. The Further Action Provision requires affirmative support, so the same alleged conduct supports a breach of that provision.[14]
There can be both peril and delight in contract boilerplate.[15] And it is a transactional lawyer’s job to identify both, preferably at the time of contracting:
Transactional lawyers are not, and should never become, mere “document processors.” They should not be merely filling in the blanks. And boilerplate is not sacred text that must remain unchanged for fear of altering some established meaning. . . . After all, the form doesn’t know anything, but the transactional lawyer must.[16]
Read and understand the potential impact of the seemingly innocuous further assurances clause. Regardless of how they are labeled, such clauses may contain more than is typical. Note that the clause in this case required not only the execution of documents to “evidence” the transactions contemplated by the agreement but also “actions” necessary to “effectuate” those transactions.
See, e.g., Glenn D. West, Is New York ‘Reimagining’ the Implied Covenant of Good Faith and Fair Dealing?, Bus. L. Today (June 18, 2026); Glenn D. West, The ‘Officious Bystander’ and the Implied Covenant of Good Faith and Fair Dealing, Bus. L. Today (May 20, 2026). ↑
Facilities Holdings, LLC v. ASM Glob. Parent, LLC, No. CV 2025-0670-JTL, 2026 WL 1815842 (Del. Ch. June 24, 2026). ↑
And they can be specific or general. See, e.g., Stock and Asset Purchase Agreement by and Among Exodus Movement, Inc., Baanx Corp., W3C Corp., and Garth Howat § 5.04(a) (May 1, 2026) (“Following the Closing, each of the parties hereto shall, and shall cause their respective affiliates to (to the extent such party is legally able to direct such action, or shall otherwise instruct), execute and deliver such additional documents, instruments, conveyances, and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement and the other Transaction Documents. Without limitation to the foregoing, at and after the Closing, and without further consideration thereof, Seller shall execute and deliver to Buyer such further instruments and certificates as shall be necessary to vest, perfect or confirm ownership (of record or otherwise) in Buyer or its designees, Seller’s right, title or interest in, to or under any of the Purchased Assets and Company Intellectual Property, free and clear of all Encumbrances. . . .”); Asset Purchase Agreement Between Red Robin International, Inc., as Seller, and Op Burger LLC, as Buyer § 2.3(c) (June 11, 2026) (“If the parties identify, prior to Closing or within one (1) year after Closing, any assets (tangible or intangible) which are owned by Seller and not included as part of the Purchased Assets and Assumed Contracts and were reasonably necessary for Seller to operate the Purchased Restaurants prior to the Closing in Seller’s ordinary course of business, then Seller shall use commercially reasonable efforts to promptly transfer, convey and/or assign such tangible assets to Purchaser, at no additional cost to Purchaser; provided Seller shall not be obligated to transfer, convey and/or assign any such tangible assets that are Excluded Assets or otherwise set forth on Schedule 3.17.”). ↑
See, e.g., Purchase Agreement Between FireFish TopCo, LLC, as Seller, and Aspire Biopharma Holdings, Inc., as Purchaser § 11.16 (June 10, 2026) (“Each party agrees to execute such additional instruments, agreements and documents and to take such other actions as may be necessary to effect the purposes of this Agreement.”). ↑
Lighthouse Behav. Health Sols., LLC v. Milestone Addiction Counseling, LLC, No. 2022-0979-MTZ, 2023 WL 3486671, at *8 (Del. Ch. May 17, 2023) (citations omitted). ↑
Id. ↑
Tina L. Stark, Negotiating and Drafting Contract Boilerplate 607 (2003), quoted in Facilities Holdings, 2026 WL 1815842, at *21 (emphasis added). ↑
See Johnson & Johnson v. Fortis Advisors LLC, 352 A.3d 229, 251 (Del. 2026) (“The covenant functions as a limited ‘gap-filler’: it enforces the parties’ reasonable expectations in circumstances that they could not foresee and did not address in their written agreement, but it may not be used to rewrite or contradict express terms.”). ↑
Madera Prod. Co. v. Atl. Richfield Co., No. CA 3-96-CV-2951-R, 1998 WL 292872, at *7 (N.D. Tex. June 1, 1998). ↑
Facilities Holdings, 2026 WL 1815842, at *1. ↑
Id. at *12. ↑
Id. ↑
Id *19 (emphasis added). ↑
Id. at *22. ↑
See generally Glenn D. West, The Perils and Delight of Contractual Boilerplate, Bus. L. Today (Apr. 15, 2025). ↑
Glenn D. West, The Form Doesn’t Know Anything: A Response to Chowdhury, Chudkowski & Gulati, 79 U. Miami L. Rev. 628, 630 (2025). ↑
