The Leaf Clean Energy Company invested $30 million with Invenergy Wind, a wind energy developer. The investment contract prohibited Invenergy from conducting a Material Partial Sale without Leafs consent. If such a sale occurred, Invenergy was required to pay Leaf a penalty. After Invenergy concluded a $1.8 billion Material Partial Sale without Leafs consent, the investment company sued to obtain its penalty under the contract, which was about $126 million.

A lower court agreed that Invenergy had breached the contract but awarded Leaf only one dollar in damages. The court reasoned that, under the terms of the agreement, if Leaf had been notified and agreed to the sale, Leaf would not have received any payment. (That is, Leaf was entitled to a penalty only if Invenergy breached the contract.) It would have been unfair for Leaf to gain such a large amount when it had not suffered any actual harm. Applying the objective theory of contracts, the Delaware Supreme Court reversed and ordered Invenergy to pay Leaf the $126 million. The appellate court scolded the lower court for ignoring the clear and unambiguous terms of the contract, which were designed to prevent Invenergy from making any major financial decisions without Leafs consent

****As a principle of contract interpretation, courts consistently strive to interpret contracts in accord with common sense. Does the application of this principle to the facts in this case support or undercut the decision of the Maryland Court of Appeals? Explain.

What consequences might Credible have suffered if the Maryland Court of Appeals had interpreted the terms of the note to require repayment only when an employee quit employment, not when that employee was fired? Discuss.****