Also known as:fungibles · fungibility · fungible goods
Written by attorneys · grounded in primary & secondary sources — see below
Goods or assets regarded as commercially interchangeable with other items of the same kind so that any unit may be substituted for another without loss of value.
Sources & Authorities
How it applies
Common Examples
6
Partnership In-Kind Distribution Attempt
Franklin Foundry and Frederick Ferguson formed a general partnership that owned 500 identical shares of publicly traded stock. When the partnership decided to make an interim distribution, the general partner proposed giving Frederick 250 shares in kind rather than selling the shares and dividing cash. Because each share was identical to every other share, the distribution satisfied the statutory requirement that each part of the asset be fungible with every other part.
Limited Partnership Condominium Proposal
Fidelity Trust served as general partner of a limited partnership holding six condominium units whose values differed sharply by view and rental income. When the partnership proposed an in-kind distribution of one ocean-view unit and one interior unit, limited partner Freya Freeman objected. The units were not fungible because their differing physical attributes and income potential prevented substitution of one for another without altering value.
Select any source to read its text and confirm it supports the definition.
Cases
Uniform Acts
Dictionaries
Attorney Advertising of Routine Services
Felicity French, a solo practitioner, advertised fixed fees for uncontested divorces. The state bar argued that legal services are too unique for price advertising to be accurate. Because routine divorce work performed by different attorneys produces substantially the same result for clients, the services qualify as fungible for purposes of truthful advertising claims.
O’Steen v. State Bar of Arizona433 U.S. 350, 97 S.Ct. 2691, 53 L.Ed.2d 810 (1977)
Public Figure Status and Reputation
Fiona Foster, a private citizen, sued a magazine for libel after an article portrayed her as a communist sympathizer. The defense contended that all individuals become fungible once they enter public discussion. Because Fiona retained distinct personal reputation separate from any public role, the court treated her as a private figure entitled to ordinary negligence standards.
Gertz v. Robert Welch, Inc.418 U.S. 323, 94 S. Ct. 2997, 41 L. Ed. 2d 789 (1974)
Harmless Error and Constitutional Rights
Faye Fuller was convicted after the prosecutor commented on her failure to testify. On appeal she argued that any constitutional violation required automatic reversal. Because different constitutional rights protect distinct values, violations are not fungible and some may be subject to harmless-error review while others are not.
Chapman v. California386 U.S. 18, 24, 87 S.Ct. 824, 17 L.Ed.2d 705 (1967)
Sex Classifications and Inherent Differences
Felicia Fuentes challenged the Virginia Military Institute's male-only admissions policy. The state argued that men and women are not fungible in the context of certain educational environments. The Court recognized that physical differences between the sexes are enduring yet rejected the claim that such differences justified excluding women from the institute.
United States v. Virginia518 U.S. 515, 533 (1996)
Common questions
Frequently Asked
4
When may a partnership distribute an asset in kind rather than cash?+
A partnership may distribute an asset in kind only when each part of the asset is fungible with every other part and each recipient receives a percentage equal in value to that person's share of distributions.
Supporting sources
Does a partner have a right to demand a distribution in any form other than money?+
No. A person has no right to demand or receive a distribution from a partnership or limited partnership in any form other than money except under the narrow in-kind conditions for fungible assets.
Supporting sources
Are condominium units in the same building treated as fungible for distribution purposes?+
No. Units that differ in views, square footage, finishes, and projected rental income are not fungible because one cannot be substituted for another without changing economic value.
Supporting sources
How does the UCC define fungible goods?+
Fungible goods are those that are interchangeable with other goods of the same kind so that any unit satisfies an obligation to deliver goods of that description.
Supporting sources
418 U.S. 323, 94 S. Ct. 2997, 41 L. Ed. 2d 789 (1974)Torts
…to lose their quality of unique personal warmth and to become the feelings of every man. Such a being, although sentient, is fungible; he is not an individual." Bloustein, Privacy as an Aspect of Human Dignity: An Answer to Dean Prosser, 39 N. Y. U. L. Rev. 962, 1003 (1964). [^maj-43]: With the evisceration of the…