## Facts

- A family partnership, Booth Computers, was created to hold wealth for siblings Claudia Cohen and James Cohen; neither drafted the partnership agreement nor contributed significant capital.
- The agreement prioritized keeping ownership within the family and included a death buyout provision.
- On a partner’s death, the surviving partner was required to purchase the decedent’s interest for the partner’s share of the partnership’s “full and true value,” which the agreement defined by reference to net book value shown on the partnership’s financial statements.
- About ten years earlier, a partner’s death triggered a buyout using the same net-book-value method.
- Claudia died in 2007; her estate asserted that fair market value of her interest was approximately $11.5 million, while the contractual net-book-value calculation yielded about $178,000.
- The estate challenged enforcement of the net-book-value formula as inconsistent with “full and true value” and as unconscionable given the disparity.

## Issues

1. Whether the buyout clause was ambiguous because it used the phrase “full and true value,” permitting or requiring valuation at fair market value instead of the agreement’s net-book-value method.
2. Whether enforcing a net-book-value buyout clause is unconscionable when net book value is dramatically lower than fair market value.
3. Whether waiver or equitable doctrines justified departing from the agreement’s express valuation method.

## Decision

- The Appellate Division affirmed the trial court’s judgment.
- The court held the agreement unambiguously required valuation by net book value as reflected on the partnership’s financial statements.
- The phrase “full and true value” did not override the agreement’s specific definition tying value to net book value.
- The disparity between net book value and fair market value, standing alone, did not make the buyout provision unconscionable.
- The record did not establish waiver or other equitable grounds (such as fraud or mistake) to displace the contractual formula.
- The estate was entitled to $178,000 for Claudia’s partnership interest.

## Legal Principles

- Whether contract language is clear or ambiguous is a question of law; courts will not manufacture ambiguity from otherwise specific valuation terms.
- When a partnership agreement specifies a buyout price computable from the partnership’s books, courts enforce that method rather than substituting appraised fair market value absent fraud, accident, mistake, or similarly recognized grounds.
- A large disparity between book value and market value does not, by itself, establish unconscionability where the parties’ agreement clearly selects book value and the choice fits the partnership’s purpose.
- Waiver requires intentional relinquishment of a known right; without proof of deliberate intent to abandon the contractual valuation term, waiver will not be found.

## Conclusion

The court enforced a family partnership’s net-book-value death buyout provision, rejecting claims of ambiguity, unconscionability, and waiver, and limited the decedent partner’s estate to the contractually calculated book-value payment.


Estate of Cohen ex rel. Perelman v. Booth Computers, 421 N.J. Super. 134, 22 A.3d 991 (N.J. Super. Ct. App. Div. 2011)