Enforceability of Unanimous Written Amendment Clauses in Stock Retirement Agreements

Introduction

This commentary examines the Vermont Supreme Court’s decision in Lynn Book, Administratrix of the Estate of Reginald Book v. Book Brothers, Inc., 2025 VT 24‐AP‐354 (Apr. 4, 2025). The dispute arises from a 1983 family‐farm corporation’s stock retirement agreement, which required that any amendment to the valuation method for buying back shares on a shareholder’s death be in a unanimous, written instrument. Reginald Book’s estate challenged the corporation’s insistence on net book value rather than fair market value for his 250 shares on his death in 2022. The Supreme Court affirmed summary judgment for the corporation, reinforcing the binding nature of written‐amendment provisions and clarifying the limits of contract modification through conduct or estoppel.

Summary of the Judgment

On cross‐motions for summary judgment, the trial court held that:

The 1983 Agreement’s provision requiring unanimous written amendment controlled share‐valuation, because Reginald never signed the 2005 draft amendment.
No genuine factual dispute existed that the shareholders had modified the provision by conduct or estoppel.
Based on undisputed financial records, the corporation’s net book value was negative $885, entitling the defendant to judgment.

The Vermont Supreme Court affirmed, holding that (1) under V.R.C.P. 56(a) there was no material fact dispute about whether the amendment was effective, (2) the written‐amendment clause was enforceable, and (3) no equitable claims were properly pleaded.

Analysis

Precedents Cited

Progressive Northern Ins. Co. v. Muller, 2020 VT 76, ¶ 9: Established that summary judgment is reviewed de novo and requires no genuine issue of material fact.
Est. of Kuhling by Kuhling v. Glaze, 2018 VT 75, ¶ 38: Recognized that contracts can, in principle, be modified by performance or course of dealings.
Spinette v. Univ. of Vt., 2023 VT 12, ¶ 22: Emphasized that the non‐moving party cannot rely on speculation to defeat summary judgment.
Greenmoss Builders, Inc. v. King, 155 Vt. 1, 7 (1990): Defined elements of equitable estoppel, including detrimental reliance.
Bernasconi v. City of Barre, 2019 VT 6, ¶ 11: Held that judgment is proper where jury would rely on speculation rather than evidence.
Molleur v. Leriche, 142 Vt. 620, 622 (1983): Described the fair‐notice standard for pleadings under V.R.C.P. 8(a).
Limoge v. People’s Tr. Co., 168 Vt. 265, 274 (1998): Confirmed that claims raised for the first time in opposition to summary judgment are not before the court.
In re Waitsfield‐Fayston Tel. Co., Inc., 2007 VT 55, ¶ 12: Held that unpled claims are not part of the litigation.
Lasek v. Vt. Vapor, Inc., 2014 VT 33, ¶ 28: Affirmed discretion to award deposition‐copy costs where “reasonably necessary.”

Legal Reasoning

The court’s reasoning unfolds in two main strands:

Contract Interpretation and Amendment. The 1983 agreement’s provision 11 required any amendments to “be in writing executed by all of the shareholders.” Under fundamental contract‐law principles, a clear written‐amendment clause prevails over attempts to alter by oral agreement or conduct. The 2005 draft amendment changing net book value to fair market value lacked Reginald’s signature, so it never took effect. Minutes from a 2006 meeting confirmed the amendment remained unsigned by him. Plaintiff offered no admissible evidence of a later unanimous, written amendment.
Summary Judgment Doctrine. Under V.R.C.P. 56(a), the movant must show the absence of material fact disputes and entitlement to judgment as a matter of law. Here, the corporation met this burden by pointing to the unambiguous written‐amendment clause, Reginald’s missing signature, and the absence of contradictory evidence. The estate failed to identify factual evidence from which a reasonable jury could conclude the amendment was validly adopted or that equitable estoppel applied.

Impact

This decision underscores the importance of adhering strictly to written‐amendment provisions in shareholder agreements, particularly in family‐owned corporations. It highlights that:

Unanimous written amendment clauses will be enforced, preventing minority shareholders from later contesting valuation terms through inconsistent conduct.
Courts will not infer oral modifications or estoppel absent clear, objective evidence of agreement and detrimental reliance.
Parties must plead all theories of relief at the outset; belated equitable claims will be barred.

Future litigants in corporate governance disputes will rely on this precedent to enforce formal amendment procedures and to challenge attempts to circumvent written requirements by oral or informal actions.

Complex Concepts Simplified

Summary Judgment: A procedure to resolve a case when there are no factual disputes requiring a jury. If one party shows no real issue of material fact, it wins as a matter of law.
Net Book Value vs. Fair Market Value: Net book value is the corporation’s accounting assets minus liabilities, whereas fair market value is the price a willing buyer would pay. The choice between them can drastically affect a buy‐out price.
Written‐Amendment Clause: A contract provision stating that changes must be in writing and signed by all parties. It protects against informal, unintended modifications.
Equitable Estoppel: A doctrine preventing a party from adopting a position contrary to one on which another party reasonably relied to its detriment. Requires clear proof of misleading conduct and reliance.

Conclusion

The Vermont Supreme Court’s decision in Book v. Book Brothers reaffirms that clear written‐amendment and unanimity requirements in shareholder agreements cannot be bypassed by partial signatures, oral assurances, or meeting minutes. It emphasizes strict adherence to contract terms, rigorous application of summary judgment standards, and the necessity of early pleading of all claims. This precedent will guide corporate counsel and courts in enforcing formal amendment procedures and safeguarding contractual certainty in corporate governance.