Originally from:
Advising Minnesota Corporations and Other Business Organizations - 2nd Edition - Hardcover
Advising Minnesota Corporations and Other Business Organizations - 2nd Edition - Electronic
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CHAPTER 109
SUBSTANCE OVER FORM: EMERGING LEGAL DOCTRINES THAT RECOGNIZE THE PRACTICAL REALITIES OF MODERN BUSINESS
Section
§ 109.01 The Payment Period Partnership: Ignoring Rigid Legal Formalities in
Favor of Acknowledging the Realities of Business
§ 109.02 Berreman v. West Publishing Company: Expanding the Definition of
Close Corporations in Context of Fiduciary Duties
§ 109.03 Triple Five of Minnesota, Inc., v. Simon: The Expansion of the
Fiduciary Duty Regarding Exposure and Available Remedies
§ 109.04 -- Factual Background
§ 109.05 -- Determining Who Owed a Fiduciary Duty
§ 109.06 -- Remedies Ordered for Breaches of Fiduciary Duties
§ 109.01 The Payment Period Partnership: Ignoring Rigid Legal Formalities in Favor of Acknowledging the Realities of Business
Business law and more specifically, the Minnesota Corporations
Code,1 requires that shareholders, officers and directors adhere to many
rigid legal requirements. Minnesota Courts have, however, demonstrated
a willingness to recognize the realities of business rather than favor an
unyielding adherence to rigid legal formalities. As the last vestige of
protection for small business, courts must now more than ever be free to
approach small-business disputes pragmatically, recognizing the harsh
realities of managing a business in these difficult economic times. This
chapter catalogs various examples of the Court in such circumstances,
disregarding rigid legal rules in favor of reaching a fair and equitable
resolution that recognizes the realities of the business.
One example of this pragmatic approach is the common-law doctrine
of the “Payment Period Partnership.” Essentially, this doctrine prevents
the statute of frauds from invalidating oral partnerships for terms longer
than one year where the business model at issue contemplates a longerterm
relationship.
Generally, the statute of frauds bars enforcement of an agreement that
cannot by its own terms be performed in less than one year.2 Despite this
general rule, Minnesota’s appellate courts have never applied the oneyear
provision to bar enforcement of an oral partnership agreement. This
exception is based upon (1) the indefinite period of the partnership entity
and (2) the continuing obligation to account for capital contributions to
the partnership.
Roger J. Magnuson is a Partner at Dorsey and Whitney, LLP, where he serves as Head of the National Strategic Litigation Group and has practiced since 1973. He has been recognized as one of the top trial lawyers in the United States by major national and international publications, including Chambers International Guide to American Lawyers, which profiles the top 500 trial lawyers in the United States, Best Lawyers in America, Who's Who in American Law, and Who's Who in America. Mr. Magnuson was also recognized by a Journal of Law and Politics' survey for Judge's Choice "Wins Most Cases."
Some high profile cases that he has litigated include representation of the Florida Senate in the Bush v. Gore election controversy in 2000; and representation of the Plaintiffs in the widely publicized and studied Mall of America case. For several years he has represented, among other persons and entities, the Minnesota Twins and Major League Baseball principals and players in litigation; and has litigated national and local cases in federal and state court venues. He has appealed before the Supreme Court in a number of cases; as well as the Minnesota Supreme Court. He has authored several articles and 7 books.
Richard A. Saliterman is a Principal in Saliternan & Siefferman P.C., a full-service firm in Minneapolis established in 1976. Mr. Saliterman is a leading expert on corporate business matters, and is the author of several publications on business start-ups, franchises, and trademarks. Mr. Saliterman is the former National Judge Advocate for the U.S. Navy League, based in Washington D.C.
Contributing Editor:
Amanda Chang
Contributing Authors:
Alecia Anderson
Seth Back
John Baker
Shannon Berg
Constatin Burachek
Benjamin Carpenter
Ryan Check
Carl Christensen
Peter Fear
Michael Frasier
Aaron Hall
Catherine Hanson
Paul Harman
Amy Ithlan
Michael Kern
Chris Kuhlman
Brett Larson
Joshua Lederman
Karen Lundquist
James Magnuson
Jennifer Mead
Rao Menier
Heidi Miller
Rachael Moxon
Oliver Nelson
Scott Peitzer
Mitchell Skinner
Jonathan Stechmann
Lael Weinberger
Jonathan Wilson
Alex Zumbulyadis
