Fiduciary Duties

Question 1

FIDUCIARY DUTIES

Answer 1

Each partner owes four fiduciary duties to the partnership: they owe duties of loyalty and care to each other and to the partnership. They also owe a statutory duty of disclosure as well as a duty of obedience.

Question 2

Duty of Loyalty

Answer 2

This duty requires each partner (1) to account to the partnership for any benefit derived by the partner in conducting the partnership business, using the partnership’s property, or appropriating a partnership
opportunity; (2) to refrain from dealing with the partnership in the conduct of its business as (or on behalf of) a party having an interest adverse to the partnership; and (3) to refrain from competing with the partnership in the conduct of its business.

Question 3

Duty of Care

Answer 3

The duty of care requires each partner to refrain from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law.

Question 4

Duty of Disclosure

Answer 4

A partner also has a duty to provide complete and accurate information concerning the partnership. The duty of disclosure is a statutory duty rather than a fiduciary one (although some judicial opinions treat
it as fiduciary in nature). R.U.P.A. provides that 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, any other information concerning the partnership’s business and affairs (except to the extent the demand or the information demanded is unreasonable or otherwise improper under the circumstances).

Question 5

Duty of Obedience

Answer 5

The duty of obedience requires the partner to obey all reasonable directions of the partnership and not act outside the scope of his or her authority.