During over four decades of legal practice, any questioning the quality and predictability of the Delaware Court of Chancery was nothing short of heretical. That changed with one famous post by Elon Musk ("Never incorporate your company in the state of Delaware”). Suddenly, it was socially acceptable for boards of directors to consider other alternatives.
The Court of Chancery is famously a court of equity. This endows the Court of Chancery with considerable leeway to fashion remedies and rules that in many cases are only loosely derived from statutory law. It also places the Court of Chancery out of the mainstream of other states which have either abolished separate courts of chancery or never had such courts. Other states rejected courts of equity because they were viewed as arbitrary and therefore unpredictable. The same criticisms were leveled against the Court of Chancery’s English forebear:
Equity is a roguish thing: for law we have a measure, know what to trust to; equity is according to the conscience of him that is Chancellor, and as that is larger or narrower, so is equity. ‘Tis all one, as if they should make his foot the standard for the measure we call a Chancellor’s foot; what an uncertain measure would this be! One Chancellor has a long foot, another a short foot, a third an indifferent foot; ‘tis the same thing in the Chancellor’s conscience.*
For students of history, it should therefore be no surprise that Delaware’s Governor Matt Meyer, a former corporate lawyer, is reportedly looking at changes to Delaware’s Court of Chancery.
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