Duties Flashcards
Partner’s Duty of Loyalty
(1) accounting to and holding for the partnership any property, profit, or benefit received by the partner in conjunction with the conduct or winding up of the partnership business or from the use of partnership property; (2) refraining from dealing with the partnership on behalf of a third party whose interests are adverse to the partnership; and (3) refraining from competing or dealing with the partnership in any manner that is adverse to the partnership.
Partner’s general duties
-A partner owes the duties of loyalty and care to the partnership, other partners, and a transferee of a deceased partner’s partnership interest.
Partnership Duty Discharge
partner must discharge the partner’s duties to the partnership and the other partners under the TBOC or the partnership agreement in good faith and in a manner the partner reasonably believes to be in the best interest of the partnership
Presumption of Standards
A partner is presumed to have met the standard of care if he acted on an informed basis, in good faith, and in a manner reasonably believed to be in the best interests of the partnership.
Limitations on Duty of Loyalty
- cant eliminate in partnership agreement
- agreement can say what does/doesnt violate the duty of loyalty as long as it’s not manifestly unreasonable
Loyalty safe harbor
- if partner makes full disclosure of all material facts a certain percentage of the other partners may authorize or ratify the transaction
Duty of Loyalty- Partners must not
1) compete with partnership business
2) advance business opportunities adverse to the partnership
3) usurp a partnership opportunity
Duty of Care: MUST NOT
1) engage in grossly negligent or reckless conduct
2) engage in intentional misconduct
3) engage in a knowing violation or the law
* agreement cannot unreasonably reduct the duty of care*
Timing of Duties
-duties of loyalty and care apply only to partners, not to prospective partners or former partners
