“Notice of Intent to Terminate” Is Not Termination: Delaware Enforces Distinct Notice Triggers in ETF Services Agreements

Case: Benchmark Investments LLC v. Pacer Advisors, Inc. (Del. Apr. 30, 2026)  |  Court: Supreme Court of Delaware  |  Disposition: Reversed and remanded

1. Introduction

This appeal arose from a contractual fight in the “white label” exchange-traded fund (“ETF”) industry. Benchmark Investments, LLC (“Benchmark”), an index sponsor/provider, engaged Pacer Advisors, Inc. (“Pacer”) to act as investment adviser and servicer for Benchmark-branded ETFs under an ETF services agreement (the “Agreement”). The Agreement contained a without-cause termination right (Section 6(c)(i)) and a separate provision permitting Benchmark, after giving “notice of its intent to terminate” in accordance with Section 6(c)(i), to propose a fund reorganization subject to approval by the independent trust board (Section 6(c)(ii)).

The central dispute was narrow but commercially significant: did Benchmark’s “notice of intent to terminate” (paired with a reorganization proposal) itself terminate the Agreement—especially once the trust board rejected the proposed reorganization? The Superior Court said yes, effectively treating “intent” notice and termination notice as functionally identical. The Delaware Supreme Court disagreed, holding the Agreement unambiguously distinguished the two.

2. Summary of the Opinion

The Court reversed the Superior Court and directed entry of summary judgment for Benchmark on the termination-declaration question. It held the Agreement unambiguously provides that:

• Section 6(c)(i) requires an actual “written notice” to terminate without cause at the end of the term.
• Section 6(c)(ii) allows Benchmark to give a “notice of its intent to terminate” and propose a reorganization, without causing a present termination.
• If the trust board rejects the reorganization and Benchmark does not later issue an actual termination notice under Section 6(c)(i), no termination occurs and the parties revert to the Agreement’s ordinary term/renewal framework.

The Court also rejected the Superior Court’s attempt to “fix” termination to the date of the board’s decision, noting the Agreement contained no such mechanism and that Pacer did not defend that termination-date theory on appeal.

3. Analysis

3.1 Precedents Cited

A. Standards of review and summary judgment framework

• SARN SD3, LLC v. Czechoslovak Grp. A.S. — Cited for the de novo standard governing both summary judgment and contract interpretation. This is important because it positioned the Supreme Court to independently determine whether the Agreement was ambiguous and whether Benchmark was entitled to judgment as a matter of law.
• State Farm Mut. Auto. Ins. Co. v. Patterson (quoting Brown v. United Water Delaware, Inc.) — Cited for the standard that the moving party must show no genuine issue of material fact and entitlement to judgment as a matter of law. The termination question was treated as a pure contract-interpretation issue suitable for summary judgment.

B. Ambiguity doctrine

• Rhone-Poulenc Basic Chem. Co. v. Am. Motorists Ins. Co. — The Court relied on Rhone-Poulenc’s core rule: a contract is not ambiguous merely because the parties disagree; ambiguity exists only when language is reasonably susceptible to more than one meaning. Applying this, the Court concluded Sections 6(c)(i) and 6(c)(ii) are not competing “reasonable” readings—because the text uses different terms for different legal acts.

C. Consistent usage—and the converse principle (different words, different meaning)

• JJS, Ltd. v. Steelpoint CP Holdings, LLC (quoting Comerica Bank v. Glob. Payments Direct, Inc.) — Cited for the presumption of consistent usage: the same phrase used in multiple places generally carries the same meaning. The Court invoked the related “inverse” idea: when parties change wording, courts should presume they intended a difference.
• Soleimani v. Hakkak (quoting Williams Cos., Inc. v. Energy Transfer LP) — Cited expressly for that inverse principle: “the use of different language in different sections of a contract suggests the difference is intentional.” This was the opinion’s interpretive fulcrum: “upon written notice” (termination) is not the same as “notice of its intent to terminate” (a statement about future action).

D. Distinguishing “intent” notices from termination notices

• Great Hill Equity Partners IV, LP v. SIG Growth Equity Fund I, LLLP — Used as a close linguistic analogue: the cited passage emphasizes that some provisions require only notice of an intent to terminate, not a notice of termination itself. The Court used this to reinforce that “intent” language has recognized and enforceable meaning in Delaware contract law.
• Portfolio BI, Inc. v. Djukic — Cited for the proposition that “notice” does not automatically mean “formal termination notice,” especially when other documents expressly require a more formal termination step. Here, the Agreement itself embodied that internal contrast: termination “upon written notice” vs. “notice of its intent to terminate.”

E. Harmonizing provisions rather than collapsing them

• Thompson St. Cap. Partners IV, L.P. v. Sonova U.S. Hearing Instr., LLC — Cited for the instruction that courts should interpret contract provisions “harmoniously.” The Court applied this by giving operative effect to both subsections: (i) creates the termination power; (ii) creates an optional, board-dependent pathway to propose reorganization before deciding whether to execute termination.

F. Real-world contract interpretation; avoiding absurdity and forfeiture-like outcomes

• Chicago Bridge & Iron Co. N.V. v. Westinghouse Elec. Co. LLC — Cited for reading provisions in light of the entire contract and commercial context (“sensible life to a real-world contract”). The Court used this to reject an interpretation that would let Pacer keep funds and revenue streams while cutting out Benchmark’s index economics.
• Terrell v. Kiromic Biopharma, Inc. (quoting Manti Holdings, LLC v. Authentix Acquisition Co., Inc.) — Cited for the rule that an interpretation is unreasonable if it produces an absurd result or one no reasonable person would accept. The Court treated the Superior Court’s reading as commercially irrational because it forced Benchmark to risk losing the benefit of the bargain simply by initiating a board-dependent reorganization process.

G. Industry context reference

• Nasdaq, Inc. v. Exch. Traded Managers Grp., LLC — Cited to describe the “white label” ETF model. While not a Delaware contract-case precedent, it framed the economics and control relationships that informed the Court’s “real-world contract” analysis.

3.2 Legal Reasoning

A. The Court’s textual holding: different words, different legal acts

The Court treated the Agreement as unambiguous because it uses materially different phrases for materially different events:

• Section 6(c)(i): termination “upon written notice” — a present exercise of a contract power that ends the relationship at the appropriate time (end of term).
• Section 6(c)(ii): “notice of its intent to terminate” — a conditional, forward-looking signal that Benchmark may later terminate, used to tee up a reorganization proposal requiring third-party approval.

That distinction did the main work. Once the Court credited the difference between “termination” and “intent to terminate,” the Superior Court’s equation of the two became a failure of contract interpretation, not a reasonable alternative reading.

B. “In accordance with” cannot erase the “intent” qualifier

The Superior Court had leaned heavily on Section 6(c)(ii)’s phrase “in accordance with sub-section 6(c)(i)” to conclude the “intent” notice is effectively a 6(c)(i) termination notice. The Supreme Court rejected that “weight-bearing” role for “in accordance with.”

Properly read, “in accordance with” functions as a cross-reference to the governing termination right and timing constraints (e.g., end-of-term limitation), not as a textual converter that transforms an “intent” notice into an executed termination.

C. The Court’s harmonized operational model (how the clauses work together)

The Court supplied a practical, clause-by-clause sequence that preserves the function of both subsections:

1. Benchmark may send a Section 6(c)(ii) “intent” notice and propose reorganization.
2. The Trust’s Board decides, in its sole discretion, whether to accept the reorganization proposal.
3. If approved, Benchmark then must deliver an actual Section 6(c)(i) written termination notice to end the Agreement and implement the transition.
4. If not approved, no termination occurs; the Agreement continues (including renewal mechanics) unless and until Benchmark later sends an actual termination notice under 6(c)(i) or other contract events occur.

This sequencing also resolves interpretive gaps the Superior Court created (e.g., what duties persist after an “intent-notice-as-termination,” who has standing to propose reorganization after termination, and what happens if no proposal is presented). The Supreme Court’s reading avoids manufacturing problems the contract never addressed.

D. Termination date: the contract must supply it

The Superior Court had pegged termination to “when the Trust decided on the proposal.” The Supreme Court found no contractual support for that date and noted that Pacer did not defend it on appeal. Under the Supreme Court’s approach, the termination date is controlled by Section 6(c)(i): the Agreement terminates when Benchmark delivers actual written notice of termination effective at the end of the applicable term (subject to contract constraints).

E. Commercial context: avoiding an outcome akin to economic forfeiture

The Court emphasized that the Superior Court’s interpretation would yield a commercially perverse result: Benchmark would effectively have to “walk away” (losing capital investment and profit expectations) merely by initiating a reorganization process that a third party could reject. The Court used the “house sitter” analogy to underscore the imbalance—an interpretation under which the service provider effectively ends up with the economic house.

That commercial context did not override text; it confirmed the text’s most natural reading and helped label the alternative as unreasonable.

3.3 Impact

A. Contract-drafting and litigation consequences (Delaware law)

• Clear reinforcement of “intent” language as legally operative. Delaware courts will not treat “intent to terminate” as a synonym for “terminate” when the contract uses both formulations.
• Limits on cross-reference phrases. Phrases like “in accordance with” generally coordinate procedures or constraints; they do not silently merge distinct legal acts unless the contract clearly says so.
• Termination-date discipline. Courts should resist selecting an “equitable” or “practical” termination date not anchored in contractual text, particularly where doing so creates cascading uncertainties.

B. Industry-specific implications (white label ETFs; board-dependent reorganizations)

• Sponsors can initiate board-dependent reorganizations without automatically triggering termination. This reduces leverage for advisers/servicers to treat exploratory or conditional steps as relationship-ending events.
• Board discretion does not become an unintended termination trigger. A board’s “no” vote does not itself terminate the sponsor-adviser services agreement absent express drafting.
• Economic alignment and IP leverage. The decision protects sponsors from interpretations that would allow service providers to retain fund economics while severing payment or index-related obligations through a “gotcha” reading of termination mechanics.

4. Complex Concepts Simplified

• “White label” ETF model: A sponsor provides an index/brand and pays a provider/adviser to run the ETF infrastructure under the provider’s platform. Revenues/fees are allocated by contract, often shifting after break-even.
• Termination “without cause”: A party ends the agreement for any reason, but only by following the contract’s timing and notice rules (here, end-of-term constraints).
• “Notice of intent to terminate” vs. “notice of termination”: An intent notice signals a future possible termination; a termination notice is the act that actually triggers contractual end-of-relationship mechanics.
• Reorganization (in this context): A proposed transaction moving the funds into another registered investment company/series—subject to approvals, including discretionary board action.
• Summary judgment: A decision without trial when there are no material fact disputes and the moving party wins as a matter of law (here, by contract interpretation).
• Contract ambiguity: A term is ambiguous only if it can reasonably bear multiple meanings—not just because parties argue about it.

5. Conclusion

Benchmark Investments LLC v. Pacer Advisors, Inc. establishes (and forcefully reaffirms) a straightforward but high-stakes principle of Delaware contract law: when an agreement distinguishes between “written notice” of termination and “notice of intent to terminate,” courts must honor that distinction. A conditional “intent” notice—especially one used to initiate a third-party-approval process—does not itself terminate the contract absent clear drafting to that effect.

The decision matters beyond ETFs. It signals that Delaware courts will (i) give independent meaning to carefully differentiated notice formulations, (ii) resist turning cross-references like “in accordance with” into semantic erasers, and (iii) interpret termination mechanics in a way that fits both the text and the real economic structure the parties created.