Copyright (c) 2007 William Mitchell Law Review
William Mitchell Law Review
BUSINESS LAW: UNENFORCEABLE FIDUCIARY DUTY LIMITATIONS: WHY DRAFTING PARTNERSHIP AGREEMENTS LIMITING THE DUTY TO DISCLOSE AND PARTNERSHIP OPPORTUNITY IS MORE PRECARIOUS AFTER TRIPLE FIVE OF MINNESOTA, INC. V. SIMON
33 Wm. Mitchell L. Rev. 1483
Aaron Hall +
On Christmas morning, the eyes of two young brothers glistened with excitement as they unwrapped matching gifts: two sets of boxing gloves. Within moments, they cleared the furniture and Round 1 began. The fun ended with the first blow to the face. "You can't do that!" shouted the recipient of the punch. To even things out, he sent a blow into his brother's stomach. Competition turned to rage, and punches were replaced by kicking and screaming. 2
Like some partners, these boys joined their endeavor with the understanding they could compete and need not disclose their moves to the other. But when one party thought the other went too far, he cried "foul," and a referee was needed to resolve the dispute. Many partners agree to compete and agree to limit what they must disclose to each other. But when a fight ensues, courts decide whether the partners properly limited their fiduciary duties.
Under partnership law, partners may limit some of the fiduciary duties they owe to each other by drafting certain provisions into their partnership agreement. After Triple Five of Minnesota, Inc. v. Simon 3 (Triple Five), however, partners may have difficulty knowing whether they can effectively limit their duty to disclose information material to the partnership and their duty not to usurp a partnership opportunity. 4
In Triple Five, the Eighth Circuit held that a partnership agreement provision limiting fiduciary duties would not be given effect. 5 The partnership agreement provided that "ZY ...
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