## Facts

- Energy Transfer Partners, L.P. and Energy Transfer Fuel, L.P. (ETP) and Enterprise Products Partners, L.P. and Enterprise Products Operating LLC (Enterprise) negotiated a proposed crude-oil pipeline project.
- The parties executed three agreements: a confidentiality agreement, a letter agreement, and a reimbursement agreement.
- Each agreement stated that neither party would be legally obligated to proceed, and no partnership or joint venture would exist, unless both companies’ boards approved and the parties executed definitive, formal agreements.
- While negotiations continued, the parties jointly marketed the project and made public statements about their cooperation.
- Enterprise later abandoned the contemplated arrangement with ETP and pursued a similar project with another company.
- ETP sued, alleging a partnership was formed under Texas Business Organizations Code § 152.051(b) and that Enterprise breached fiduciary duties (including the duty of loyalty) by leaving the project.

## Issues

1. Whether Texas law permits parties to agree that no partnership will exist between them unless specified conditions precedent (e.g., board approval and execution of definitive agreements) occur, even if conduct might otherwise satisfy § 152.051(b).
2. Whether the agreements at issue imposed enforceable conditions precedent that precluded partnership formation as a matter of law.
3. Whether there was legally sufficient evidence that Enterprise waived the contractual conditions precedent.

## Decision

- The Supreme Court of Texas affirmed judgment for Enterprise.
- The Court held parties may, by contract, conclusively negate partnership formation unless agreed-upon conditions precedent are satisfied.
- The Court held the parties’ agreements unambiguously conditioned any partnership or binding relationship on board approval and executed definitive agreements, which never occurred.
- The Court held there was no legally sufficient evidence that Enterprise waived those conditions precedent; exploratory marketing and “partner” terminology did not show a clear, intentional relinquishment of the contractual protections.

## Legal Principles

- Parties may contractually impose conditions precedent to partnership formation and may agree that no partnership exists unless and until those conditions are met.
- Texas Business Organizations Code § 152.051(b) provides a totality-of-the-circumstances framework for determining partnership formation, but it does not bar enforcement of clear contractual terms that condition or negate partnership status between the contracting parties.
- Where negotiated agreements state that no obligations or partnership arise absent execution of definitive agreements and requisite approvals, courts will enforce those conditions and will not infer a partnership from conduct consistent with pre-contract negotiations.
- Waiver of a contractual condition precedent requires clear, unequivocal, and decisive proof of an intentional relinquishment of a known right; conduct consistent with the contracts’ contemplated preliminary activities is insufficient.

## Conclusion

Because the agreements made board approval and executed definitive contracts prerequisites to any partnership and those prerequisites were neither satisfied nor waived, no partnership existed and ETP’s fiduciary-duty claims failed.


Energy Transfer Partners, L.P. v. Enterprise Products Partners, L.P., 593 S.W.3d 732 (Tex. 2020)