Modified Duties

March 30, 2025

The Dallas division of the Business Court recently addressed contractual modification of partnership duties in Primexx v. Primexx, (March 9, 2025). Consistent with the supreme court’s general theme in Energy Transfer v. Enterprise, 593 S.W.3d 732 (Tex. 2020), that statutory partnership-formation requirements can be modified, Primexx held that a partnership agreement had effectively limited the (nonwaivable statutory) duties of loyalty and care to the fullest extent permitted by Texas law.

Specifically, the Court found that the agreement allowed the controlling partner to act in its sole interest and discretion, provided it met the minimum statutory requirements under the Texas Business Organizations Code. While the agreement limited the fiduciary duties, it did not eliminate the obligation to act in good faith. And the good faith obligation of the  TBOC does not rise to the level of a separate fiduciary duty but requires parties to “deal fairly” with each other.

Accordingly, the controlling partner’s actions in exercising its “drag-along” rights and forcing the sale of the partnership’s business were within the bounds of the modified fiduciary duties as outlined in the agreement.