On January 29, 2024, in Cantor Fitzgerald, L.P. v. Ainslie, the Delaware Supreme Court reversed a Chancery Court holding that a forfeiture-for-competition provision in a limited partnership agreement was unenforceable as an unreasonable restraint of trade. Applying the Delaware Revised Uniform Limited Partnership Act (“DRULPA”), the Supreme Court held that (i) the forfeiture-for-competition provision was not a liquidated damages provision or a noncompete covenant subject to scrutiny for reasonableness; and (ii) in light of public policy considerations regarding freedom of contract and enforceability of partnership agreements, and absent extraordinary circumstances, such forfeiture-for-competition provisions should be enforced.

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