Scholar argues that Delaware partnerships risk turning investor safeguards into a box-checking exercise.
A recent Delaware Supreme Court decision rejected a reading of its earlier decision that would have handed fund managers a roadmap to narrow investor protections.
Although Delaware judges give parties wide leeway to make the deals they want, Delaware law codifies a baseline rule: A partnership agreement cannot eliminate the implied covenant of good faith and fair dealing, which bars arbitrary or unreasonable conduct that deprives the other party of the benefit of a bargain.
In a recent law journal comment, legal practitioner Julia L. Englebert argues that the Delaware Supreme Court’s 2022 decision in Boardwalk Pipeline Partners v. Bandera Master Fund risks undermining this fundamental principle. The court echoed her concern in its 2025 opinion, pushing back on taking its earlier decision too far.
In Boardwalk, the fund manager had a contractual right to force public investors to sell their units if a lawyer issues a legal opinion saying that a change in federal rules would seriously hurt the business. The contract also said that, if the manager relied on such a legal opinion, the manager would be “conclusively presumed” to act in good faith—meaning the court must treat the manager as honest and could not second-guess that good faith, even if the opinion is weak or biased.
The manager procured two opinion letters from two law firms and used them to cash out the public investors. The court, in its 2022 opinion, reversed the trial court’s finding of bad faith and held that a conclusive presumption of good faith was triggered even though the defendant’s manager relied on a second lawyer’s letter that only vouched for the first letter—without assessing its merits.
Englebert contends that the 2022 Boardwalk decision was a new high-water mark in the Delaware Supreme Court’s “contractual flexibility” jurisprudence. She argues that the decision signals the court’s willingness to condone bad-faith opinions and to extend the application of conclusive presumptions.
Englebert observes that the court treated the second lawyer’s opinion as sufficient to invoke a conclusive good-faith presumption and reversed, yet it did not disturb the trial court’s determination that the first lawyer’s opinion was contrived and issued in bad faith.
The court’s holding creates a framework that, in Englebert’s view, allows a clean reasonableness opinion to neutralize a bad-faith factual opinion it endorses, insulating managers through procedure rather than substance. For example, a sponsor can secure a contrived primary opinion to satisfy a factual precondition and then rely on a second, acceptability opinion that does not verify the underlying facts.
In addition, Englebert argues, the 2022 Boardwalk decision represents a “significant extension of—if not outright break with—precedent” established by prior cases. She contends that the two cases on which the Boardwalk court relies, Gerber v. Enterprise Products Holdings and Norton v. K-Sea Transportation Partners, do not do the heavy lifting the court suggests.
According to Englebert, Gerber ties the presumption of good faith to an opinion that addresses the relevant question—the concrete precondition that the contract requires. She contends that Boardwalk departs from that standard by allowing a second “acceptability” opinion to trigger the presumption without addressing that relevant question.
Similarly, Englebert points out that Norton applies the conclusive presumption only after an expert opinion addressed the relevant fairness question, and the public unitholders approved the merger, two safeguards absent in Boardwalk.
Englebert contends that the 2022 Boardwalk decision lets fund managers wield the presumption of good faith as a powerful tool to defeat investor claims, with far-reaching consequences. She posits that the decision will likely encourage opinion shopping, blunt the force of trial findings, and deepen information asymmetry by leaving crucial facts unchecked.
In practice, as norms drift toward opinion cleansing, investors in contract-heavy partnership structures will be left without meaningful protection from bad-faith conduct by fund managers, Englebert warns. She also anticipates market effects: investors will attempt to price in the risk by demanding higher premiums on their units, pushing up the cost of raising money.
More broadly, Englebert argues that letting partnership agreements say almost anything without limits gives judges more leeway in deciding cases, creating unpredictability and slowing the development of shared market norms.
Englebert argues that the solution goes beyond a simple affirmance or reversal by the Delaware Supreme Court. She contends that the Boardwalk decision highlights a structural problem in which the court allowed an acceptability opinion to stand in for an answer to the relevant question. A direct reversal would condone bad-faith behavior but, Englebert warns, affirming the trial court decision would risk devaluing the legal opinions practice in Delaware.
Instead, Englebert proposes tightening professional norms for “opinions on opinions.” She would require the secondary counsel to certify that the primary opinion follows established opinion-giving practices and to perform a minimal check of key predicates—without opining on the ultimate merits.
Englebert also urges firms to adopt policies limiting acceptability work in fact-heavy matters so that deficient secondary opinions are easier to challenge, allowing plaintiffs to defeat the conclusive presumption and force real review.
Englebert also urges courts to return to a more faithful reading of Gerber by focusing on preserving the parties’ reasonable expectations—which is what the doctrine is meant to do in the first place. After all, Englebert warns, if the court does not play its proper role in assuring reasonable conduct, as implied by the contract terms, then no one does.
In its 2025 decision, the Delaware Supreme Court adopted that view of the court’s role: It emphasized that the contract’s built-in protections have to be real in practice and warned they would be “toothless” if managers could satisfy them through empty formalities rather than meaningful checks.
