Cantor Fitzgerald, L.P. v. Ainslie

Summary

The Supreme Court of Delaware held that a forfeiture-for-competition provision in a limited partnership agreement is a condition precedent to payment of deferred partnership benefits, not a liquidated-damages provision or restraint of trade subject to reasonableness review. Because sophisticated partners voluntarily agreed to the provision and no unconscionability, bad faith, or other extraordinary circumstance was shown, the partnership could enforce it under Delaware's strong policy favoring freedom of contract. The court reversed the Court of Chancery and remanded for a determination whether a genuine issue of material fact existed as to whether the plaintiffs engaged in competitive activity.