High court declines to test forfeiture for reasonableness

Trial Notebook

By Steven P. Garmisa

Hoey & Farina

Posted March 1, 2024 8:50 AM

Updated March 1, 2024 1:25 PM

Based on its reverence for freedom of contract, the Delaware Supreme Court refused to apply a reasonableness test to “forfeiture for competition” provisions in a limited partnership agreement that authorized Cantor Fitzgerald to withhold distributions — ranging from $100,000 to $5 million — from six former partners.Vice Chancellor Morgan Zurn had ruled for the ex-partners in what the high court acknowledged was “a thoughtful opinion that draws heavily from our case law governing covenants not …

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