Rajeshkumar responded that the contract could not lawfully be enforced. Discuss who will prevail and why.
L. G. and S. L. Patel, husband and wife, owned and operated the City Center Motel in Eureka. On April 16, Rajeshkumar, the son of L. G. and S. L., formed a partnership with his parents and became owner of 35 percent of the City Center Motel. The partnership agreement required that Rajeshkumar approve any sale of the motel. Record title to the motel was not changed, however, to reflect his interest. On April 21, L. G. and S. L. listed their motel for sale with a real estate broker. On May 2, P. V. and Kirit Patel made an offer on the motel, which L. G. and S. L. accepted. Neither the broker nor the purchasers knew of the son’s interest in the motel. When L. G. and S. L. notified Rajeshkumar of their plans, to their surprise, he refused to sell his 35 percent of the motel. On May 4, L. G. and S. L. notified P. V. and Kirit that they wished to withdraw their acceptance. They offered to pay $10,000 in damages and to give the purchasers a right of first refusal for five years. Rather than accept the offer, on May 29, P. V. and Kirit filed an action for specific performance and incidental damages. L. G., S. L., and Rajeshkumar responded that the contract could not lawfully be enforced. Discuss who will prevail and why.
Under UPA, for making any decisions relating to partnership, consent of all the partners or majority as provided in the partnership agreement is necessary. In this case, the partnership agreement provides that for sale of any motel, consent of Partner R is necessary. The contract between partnership, Person P.V., and Person K does not get the consent of Partner R, so the contract is not binding to the partnership. In this situation, it is considered better to protect the partnership and not enforce the contract.
In this case, chances of success of the partnership are more as the partnership agreement states that for sale of motel, consent of Partner R is necessary and without the consent, no contract can be considered valid. Contract between partnership and Person P.V. never got the acceptance of Partner R for sale of land.