Gardner Davis and Ryan McNulty Assess Ruling on Forfeiture-for-Competition Provisions in Delaware Partnership Agreements

Foley & Lardner LLP partner Gardner Davis and associate Ryan McNulty authored the Westlaw Today article, “Delaware OKs forfeiture-for-competition in partnership agreements.”

In the article, the authors discuss discuss the Delaware Supreme Court’s decision in Cantor Fitzgerald LP v. Ainslie, which confirmed that absent extraordinary circumstances, Delaware courts will hold parties to the terms of a partnership agreement.

“With the Supreme Court holding that the common law’s disfavor of forfeitures does not extend to limited partnership agreements and that forfeitures in limited partnership agreements should enjoy the Court’s deference on equal footing with any other bargained-for-term in a limited partnership agreement, Delaware partnership law provides a powerful tool to create financial disincentive that discourages competition by former partners,” the authors conclude.