Chapter 3: The Partnership

Section E: Fiduciary Duties

2. Codification of Fiduciary Duty and Contractual Waiver

Business r!ani"ations# Fall 2$%&

NAME:
Singer v. Singer 'Court of (ppeals of )laho*a# %+,%-.
FACTS:
The Sin!er fa*ily for*ed an oil production partnership in the %+3$s.
Bet.een %+/2 and %+00# intra1fa*ily assi!n*ents resulted in (ndrea and her 2rother Stanley 2eco*in! partners.
3n %+00# the parties re1drafted the partnership a!ree*ent# definin! duties and ri!hts of the parties and restatin! the current o.nership percenta!es.
n 4uly 25# %+0+# the 4osaline partners held a *eetin! in )laho*a City .hich .as attended 2y several *e*2ers of the 4osaline partnership.
The *eetin! .as held to discuss routine 2usiness of 4osaline. The ite* of interest .as the possi2le purchase of +5 acres of land in the Britton area
o.ned 2y 3nvestors Diversified Services. The proposed purchase included &5 acres of *inerals and .as listed for sale at a purchase price of one and
one1half *illion dollars.
Before the *eetin!# 4oe Sin!er re6uested Stanley to loo) into purchasin! the land. (t the *eetin! the purchase .as 2arely discussed.
(fter the *eetin!# defendants Stanley and (ndrea for*ed a !eneral partnership# 7e*ini 8ealty Co*pany '7e*ini- and on Septe*2er 25# %+0+#
purchased the 3DS land# ta)in! title in 7e*ini9s na*e .ithout further consultation .ith any of the 4osaline partners.
4oe learned of the transaction and de*anded Sin!ers Bros. partnership 2e per*itted to purchase 5$: of the property. 3nitially# Stanley offered to !ive
Sin!er Bros. %/.//: 2ut .ithdre. the offer.
4osaline '4oe- ar!ue that 2y reason of the fiduciary aspects of partnership it is entitled to participate in the purchase of the 3DS land...We .ould a!ree 2ut for
para!raph , of the partnership a!ree*ent.
ISSUE:
Whether defendants had a contract ri!ht to co*pete .ith the partners of the other partnership..
HOLDING:
;es.
Because of para!raph ,# the fact that the land is in an area of partnership interest does not preclude intra1partnership co*petition. ( special area of
interest is <ust another .ay of la2elin! and descri2in! an invest*ent area .here co*petition is ordinarily not per*itted 2et.een partners# a2sent
a!ree*ent.
4osaline contracted a.ay its ri!ht to e=pect a nonco*petitive fiduciary relationship .ith any of its partners.
Para!raph , is desi!ned to allo. and is uni6uely drafted to pro*ote spirited# if not outri!ht predatory co*petition 2et.een the partners. 3ts stron!
.ordin! leaves no dou2t in our *inds that its drafters intended to effect such a result. This is reinforced 2y the fact the partners repeated the sa*e
clause in t.o successive contracts.
Fro* a fiduciary aspect# the per*issi2le 2oundaries of inter 1partnership co*petition# under para!raph ,# are li*ited only after the threshold of
actual partnership ac6uisition has 2een crossed.
Prior1 4oe .on
>oldin!1 4oe loses.


DISPOSITION:
4ud!*ent reversed.
DISSENT:

CASE BRIEF: Sin!er v. Sin!er