Chancery’s Deep Doctrinal Dive into the Definition of Voidable v. Void Corporate Acts

A recent Delaware Court of Chancery opinion is required reading for those interested in the important distinction between corporate acts that are void as compared to voidable. In a 100-plus page decision in connection with approving a class action settlement and attorneys’ fees, the Court of Chancery engages in a deep doctrinal dive and scholarly analysis into the void versus voidable distinction in corporate acts.

In the process the court provides a mini treatise on the impact of the recent Delaware Supreme Court decision in Moelis on various aspects of Delaware law and the public policy implications of the new rule for the void v. voidable distinction.

In Dollens v. Goosehead Insurance, Inc., C.A. No. 2022-1018-JTL (Del. Ch. June 30, 2026), the court provides noteworthy guidance on the wide-ranging impact of the Delaware Supreme Court decision in W. Palm Beach Firefighters’ Pension Fund v. Moelis & Co., 2026 WL 184868 (Del. Jan. 20, 2026).

This decision requires careful review for its cornucopia of clarifications of important nuances of several aspects of Delaware corporate law but my purpose in this short blog post is to merely provide highlights to whet the appetite of serious practitioners and followers of corporate law.

Highlights

• This Court of Chancery decision clarifies the Supreme Court’s new test for voidness in the Moelis decision, and describes the doctrine of “hypothetical legal significance” as the new approach to identify voidable (not void) corporate acts, which is a tip of the hat to the doctrine of independent legal significance. The new doctrine looks to whether the corporation hypothetically could have achieved the result it sought. Slip op. at 3-4.
• The Court of Chancery also observes that the concept of incurable contract voidness has been abrogated legislatively. See footnote 9.
• The court clarifies the basic difference between void and voidable. Slip op. at 21-22.
• The court addressed the recent amendments to DGCL § 122(18) regarding the interface of governance agreements with the requirements of Section 141(a), but noted that the recent amendments did not apply to pending cases like this one. See footnote 7.
• Nonetheless, the court discusses the impact of that amendment on the broader public policy and doctrinal implications of the void v. voidable issue. One of the many benefits of this decision is that it explains and clarifies not only the Supreme Court ‘s decision on Moelis but its application to and implication in various aspects of corporate law.
• In particular, the Court of Chancery explains the current definition for voidness in light of the Moelis decision. Slip op. at 27-30.
• The court provides guidance about how governance agreements can be included in corporate charters to avoid Section 141(a) issues and how that relates to the new doctrine of hypothetical legal significance. Slip op. at 29-34.
• The Court of Chancery teaches that the Supreme Court in Moelis “implicitly rejected” the “concept of a core area of board power that even the charter could not regulate—or at least cannot regulate without the party holding the charter-based right taking on the fiduciary duties that the directors would otherwise owe.” Slip op. at 39-40. See also footnotes 88-90.
• The court elucidates the impact of the hypothetical legal significance doctrine on several Delaware law principles—and identifies several cases that are abrogated by the Moelis decision. Slip op. at 48, et seq.
• The court provides a comparison of the doctrine of hypothetical legal significance, which does not require a corporate act, with the Validation Amendments codified at DGCL §§ 204-205, which do require a corporate act before the defective act can be fixed or remedied.
• The court lauded the new doctrine of hypothetical legal significance as a helpful “spring cleaning” of some older statements of the law about voidness as that concept was used in prior cases. Slip op. at 58-61.
• The court predicted that the impact of the hypothetical legal significance doctrine on various Section 141(a) issues will be less predictable. Slip op. at 61.
• The Court of Chancery opined that the Moelis decision promotes a more contractarian view of corporate governance and allows more opportunities to constrain or tailor fiduciary duties. Slip op. at 72-80.
• In connection with its analysis of whether the class action settlement should be approved and what amount of attorneys’ fees should be awarded, the court observed that some practitioners are now charging close to or more than $3,000 an hour and that a lodestar rate of about $1,500 per hour would equate to what some junior partners are charging. Slip op. at 103-104.