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Ruling: Second fee agreement: This agreement, made after def was formed, is written to obligate def to pay a large agent’s fee to pl. It is signed only by pl and def2, who said that he was emotionally weak at the time and gave in to pl’s pressure. According to def’s bylaws, def3’s signature is needed to make an agreement binding.
Whereas the sales agreement affects all of the partners of def, because it allows for their property to go to pl, the fee agreement, which can be paid by any of them, could in theory not affect all of them. In a communication between them, def3 told pl that he knew that def2 signed such an agreement and did not care because he believed that def1, whom def2 represented, would pay the fee. Indeed, when def was formed, it was expected that def1 would be the main provider of funds for def. While pl wrote to def3 that he made def2 sign and did not demand def3 to do so because he trusted def3 to not give him trouble, it is clear that the two understood that def as a partnership could not be forced into paying his fee. Therefore, this agreement was not binding on def when it was signed.
However, further communication shows that def3 was aware that an agreement was signed, and he had seen drafts of the agreement that had def being responsible to pay the fee to pl. Def3 claims that he asked for and did not receive the final agreement and so he was not bothered by the agreement since he did not think it obligated him. Pl claims def3 did receive it. Pl asked for and received, based on def3’s advice, minutes of a board meeting of def to approve the agreement. Although def3 claims that he did not sign the minutes, but that def1 did, it does not make a difference because def3 was behind the effort to have the legal power of def accept the agreement. This means that he knew that beyond def1, def as a body was going to be obligated, which is significant even if in practice it was expected that def1 would pay.
Therefore, def is now obligated to pay pl according to the conditions in all the existing agreements. It is too early to discuss personal liability of the partners if def does not pay.
P'ninat Mishpat (834)
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