The Delaware Court of Chancery rejected a general partner’s claim that the limited partners of a Delaware limited partnership (the “Partnership”) had a duty to act reasonably when exercising their discretion to remove the general partner, where the Partnership’s operating agreement explicitly provided how the limited partners’ discretion was to be exercised. In this case, the Partnership’s operating agreement provided that the limited partners could remove the general partner if they made a “good faith” determination that such removal was in the best interests of the Partnership. The defendant general partner argued that, in addition to the contractual obligation to exercise their discretion in “good faith” when determining whether to remove the general partner, the limited partners were required to act reasonably under the implied covenant of good faith and fair dealing. The Court rejected the defendant’s argument on the basis that the express contractual obligation to act “in good faith” superseded any obligation on the part of the limited partners to act in a particular manner under the implied covenant of good faith and fair dealing. According to the Court, if the Partnership’s operating agreement had stated that the determination was to be made in the limited partners’ “sole discretion,” the effect would also have been to displace the implied covenant.
