Duties

Question 1

Fiduciary Duties

Answer 1

Each partner owes four fiduciary duties to the partnership:

Duty of Care

• to EACHOTHER (to partners individually) AND
• to the PARTNERSHIP
  Duty of Loyalty
• to EACHOTHER (to partners individually) AND
• to the PARTNERSHIP

duty of Disclosure

duty of Obedience

[C O L D]

Question 2

Duty of Loyalty

Answer 2

Put Pship interests ahead of yours, and treat them with utmost fairness. Competing with them/taking benefit of them = not fair.

1. Account to partnership for any benefit derived by Prtner in conducitng Pship biz, using the Pship’s property, or appropriating a Pship opportuntiy.
2. No taking adverse positions to partnership - refrain from dealing with Pship in the conduct of its business as an advere party.
3. No competing with partnership in the conduct of its business .

Question 3

Duty of Care

Answer 3

Refrain from engaging in GROSSLY negligent or reckless conduct, intentional misconduct, or knowing unlawful conduct.

What’s missing? Excuses NEGLIGENT behavior - that’s not a violation of the duty of care.

Question 4

Duty of Disclosure

Answer 4

Duty to provide complete AND accurate information concerning the partnership.

Each partner and the partnership shall furnish to a partner…
(1) without demand, any information concerning the partnership’s business and affairs reasonably required for the proper exercise of the partner’s rights and duties; and

(2) on demand (when other partners ask for it), any other information concerning the Pship’s business and affairs (except to the extent the demand or the information demanded is unreasonable or otherwise improper under the circumstances).

** This is statutory duty, not fiduciary - so it can be changed by agmt.

Question 5

Eliminating duties by contract?

Answer 5

CANNOT eliminate duty of loyalty and care (fiduciary duties) by Pship agreement.

BUT, can get rid of duty of DISCLOSURe - bc it’s not a fiduciary duty.

Question 6

Duty of Obedience

Answer 6

Requires the partner to (i) obey all reasonable directions of the partnership and (ii) not act outside the scope of his or her authority.