Present: All the Justices 

PERSINGER & COMPANY 

OPINION BY JUSTICE LAWRENCE L. KOONTZ, JR. 

v. Record No. 952160 November 1, 1996 

MICHAEL D. LARROWE 

FROM THE CIRCUIT COURT OF ALLEGHENY COUNTY 

Duncan M. Byrd, Jr., Judge 

 In this appeal we consider whether an individual can be 

bound by a non-competition clause of a partnership agreement to 

which he was not a signatory, although he accepted a partnership 

interest and served as a partner for several months.1

 Under the 

facts of this case, we hold that the partnership agreement did 

not bind the former partner who did not sign it. 

 The pertinent facts are not in dispute. From 1980 to 1987, 

Michael D. Larrowe (Larrowe) was a staff accountant with the 

general accounting firm of Persinger & Company (the Persinger 

firm). In 1985, Larrowe was promoted to a non-equity position of 

"office partner" and signed a non-competition agreement as a 

condition of this promotion. Larrowe left the firm in 1987 on 

good terms and joined an accounting practice in North Carolina. 

 In September 1990, Larrowe returned to Virginia and entered 

into negotiations to resume employment with the Persinger firm. 

Larrowe wished to be made a general or full partner with equity 

in the firm. The parties agree that when Larrowe resumed 

 

 1This appeal was brought by the partnership in order to 

contest two interpretations of terms in the agreement made by the 

trial court in rendering judgment for the partnership which 

limited the amount of the recovery. Our resolution of the 

dispositive issue, which was raised as cross-error by the former 

partner, renders these issues moot. 
employment with the firm as an office partner in December 1990, 

there was a mutual expectation that an equity partnership offer 

ultimately would be extended to him. In November 1991, the 

Persinger firm requested that Larrowe re-execute the 

non-competition agreement as an office partner. Larrowe refused, 

and the request was not pursued. 

 During the summer of 1992, Larrowe and the firm entered into 

negotiations regarding his promotion to equity partner. During 

the course of these negotiations, Larrowe was provided with a 

copy of the Persinger firm's July 1, 1989 partnership agreement 

which included a non-competition provision: 

 24.1 Limitations Imposed on Former Partner. 

 When a party to this Agreement ceases to be a 

partner, whether by reason of withdrawal or retirement, 

he will observe the following limitations. For a 

period of three (3) years immediately following the 

date he ceased to be a partner, or while he is 

receiving guaranteed payments from the partnership, he 

shall not directly or indirectly render public 

accounting services to any clients who were serviced by 

the partnership at date of his withdrawal or 

retirement. A partner violating this paragraph shall 

pay to the partnership an amount equal to one-third 

(1/3) of each year's fee as collected for a period of 

three (3) years. Such amount is due within thirty (30) 

days after it has been collected from the client by the 

former partner. 

In addition, the agreement contains the following provision: 

 26.3 Changes in General Partners. 

 The obligations and rights accruing to this 

partnership by virtue of this Agreement shall continue 

unabated regardless of any change in the membership of 

this general partnership; such obligations and rights 

shall be automatically assigned to the partners 

constituting the general partnership created by this 

Agreement as of any particular date; and, such 

assignments shall be effective without any further 

affirmative action on the part of the parties hereto. 
 On September 1, 1992, Larrowe wrote a letter accepting "the 

Firm's offer of a general partnership interest." The nature of 

the Persinger firm's offer is not disclosed in the record, but it 

is undisputed that Larrowe did not sign the 1989 partnership 

agreement or any similar document at this or any subsequent time. 

 Shortly after Larrowe became a general partner, two senior 

members of the Persinger firm began to make preparations for 

their retirement. During this period, the remaining partners, 

including Larrowe, discussed drawing a new partnership agreement 

to be signed after the retirements became effective. The 

partners were also considering reconstituting the firm as a 

professional limited liability corporation. 

 Larrowe served as a general partner until January 26, 1993, 

when he submitted his resignation. Larrowe subsequently began 

his own accounting practice in Galax. He solicited a number of 

the Persinger firm's clients, obtaining employment from some. 

 On August 9, 1993, the Persinger firm filed a petition for 

declaratory judgment and bill of complaint against Larrowe 

seeking to enforce the non-competition provision of the 1989 

partnership agreement and to recover fees it alleged were owed 

the firm under the provisions of the agreement. Larrowe filed 

grounds of defense asserting that he was not subject to the 

partnership agreement and its non-competition provision. 

Following an ore tenus hearing, the trial court entered judgment 

for the Persinger firm. This appeal followed. 

 There can be no doubt that upon Larrowe's acceptance of the 

Persinger firm's offer of a general partnership interest, a 
partnership was created between the Persinger firm and Larrowe. 

The threshold issue of this appeal is whether by virtue of that 

partnership Larrowe could be bound by the 1989 partnership 

agreement and its non-competition provision without being a 

signatory thereto. In resolving this issue we are guided by the 

well settled principles that the Persinger firm had the burden of 

proof and that because non-competition agreements are a restraint 

of trade, they will be carefully examined and strictly construed 

before they will be enforced. See Clinch Valley Physicians, Inc. 

v. Garcia, 243 Va. 286, 289, 414 S.E.2d 599, 601 (1992). 

 The Persinger firm asserts on brief that the only plausible 

interpretation of the facts in this case is to assume that its 

"offer of general partnership in the firm was an offer for 

Larrowe to become a party to the [1989] Agreement." In support 

of this position, the firm contends that article 26.3 of the 1989 

partnership agreement "automatically subjects new partners to the 

same rights and obligations [of the 1989 partnership agreement] 

as other partners . . . requir[ing] no affirmative conduct for 

these effects to occur." We disagree. 

 The 1989 partnership agreement evinces the intent of its 

signatories to conduct business as a partnership and to be bound 

by the included non-competition provision. It is true that in 

the course of the Persinger firm's negotiations with Larrowe, he 

was shown this document. Thereafter, when an equity partnership 

offer was extended to Larrowe and that offer was accepted by him, 

no reference was made to this document. Nothing in the record 

supports the conclusion that this offer expressly or implicitly 
required Larrowe to become a party to the 1989 agreement. To the 

contrary, the Persinger firm concedes that Larrowe was never 

asked to sign the agreement, and the record is unequivocal that 

he did not do so.2

 Nor could Larrowe be bound to the agreement under the 

provisions of article 26.3. For the Court to find that the 

article has the effect proposed by the firm, we would be required 

to accept the circular reasoning that Larrowe was bound by the 

agreement by virtue of the agreement's requirement that partners 

be bound by it. A more sensible construction of article 26.3 

would be that those partners who were signatories to the 

agreement would remain bound by the agreement at the time of a 

dissolution or other change in the composition of the general 

partnership. 

 The Persinger firm's threshold burden in this case was to 

establish that Larrowe was a party to the 1989 agreement and its 

non-competition clause. Until the parties have a distinct 

intention common to both and without doubt or difference, there 

is a lack of mutual assent and, therefore, no contract. 

Progressive Construction Co. v. Thumm, 209 Va. 24, 30, 161 S.E.2d 

687, 691 (1968). The record before us fails to show that 

Larrowe gave his assent to the 1989 agreement or to any express 

agreement other than to serve as a general partner. 

 

 2Moreover, Larrowe apparently was not shown or asked to sign 

a 1991 general partnership agreement which was also produced at 

trial, although not made an exhibit. According to the testimony 

of one of the partners, the 1991 agreement was substantially 

similar to the 1989 agreement, but was signed by a different 

group of individuals. 
 A partnership is defined as "an association of two or more 

persons to carry on as co-owners a business for profit." Code 

§ 50-6(1). The statutory language implies the voluntary joining 

together of two or more persons with the intent to form a 

partnership. No written document is necessary to create the 

partnership. 

 Furthermore, it is permissible for existing partnerships to 

associate with individuals, corporations, and other partnerships 

for the purpose of forming new partnerships. See Code §§ 50-2, 

50-6. Thus, when Larrowe accepted the Persinger firm's offer, a 

partnership was formed between Larrowe and the partnership that 

then constituted the Persinger firm. Whatever the nature of this 

new partnership, with regard to Larrowe's rights and obligations, 

it was decidedly not created by nor subject to the provisions of 

the 1989 partnership agreement. 

 Stated another way, when Larrowe accepted the Persinger 

firm's offer, he became an equity partner not subject to the 1989 

partnership agreement. Absent some written agreement 

affirmatively adopted by Larrowe providing otherwise, the 

partnership between Larrowe and the Persinger firm was governed 

exclusively by the Uniform Partnership Act. Code §§ 50-1 through 

-78. Accordingly, the Persinger firm's claims against Larrowe, 

founded solely on the operation of the 1989 partnership 

agreement, lack merit because Larrowe was not a party to that 

agreement. 

 For these reasons, we will reverse the judgment of the trial 

court and enter final judgment for Larrowe. 
Reversed and final judgment.