This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
A contract to form a partnership is one the breach of which cannot ordinarily be compensated for by money damages, and the damages arising from which are ordinarily difficult to estimate. From these principles it follows that specific performance of such contracts may be had unless other facts of the case make it impracticable or impossible. Whether a contract to form a partnership is enforceable specifically in equity or not depends primarily on its duration. If for a single transaction1 or for limited duration2 it will ordinarily be enforced specifically. If, on the other hand, its duration is not fixed, it is terminable at will, and since specific performance would be useless it will in general be denied.3 Even this rule is not arbitrary. The party who seeks relief may have altered his position in reliance upon the contract, so that he will be prejudiced greatly if the partnership is not formed, and he will receive substantial relief if the partnership is formed, even if it is immediately ended. In such cases equity will decree specific performance.4 Shares of stock in a joint-stock company which is by statute not a corporation have been treated as analogous to interests in a partnership, and specific performance has been denied,5 though in other cases such shares have been treated as analogous to corporate stock and specific performance has been given.6
1 Clancy v. Flusky. 187 I11. 605: 52 L. R. A. 277; 58 N. E. 594 (following Irwin v. Dyke 114 I11. 302; 1 N. E. 913; Stillings v. Stillings, 67 N. H. 584; 42 Atl. 271).
2 Chadwick v. Chadwick, 121 Ala. 580; 25 So. 631; Mowers v. Fogg, 45 N. J. Eq. 120: 17 Atl. 296.
3 Gardner v. Knight. 124 Ala. 273; 27 So. 298. For the doctrine of mutuality of remedy, see Sec. 1621 et seq.
1 Scott v. Rayment, L. R. 7 Eq. 112.
2 Morris v. Peckham, 51 Conn. 128.
3 Hercy v. Birch. 9 Ves. Jr. 357; Clark v. Truitt, 183 I11. 239; 55 N. E. 683.