Fiduciary Duties

Question 1

Fiduciary Duties Owed By A Partner

Answer 1

A partner owes the following duties to the partnership AND to their fellow partners:
1. Duty of Loyalty
2. Duty of Care
3. Duty of Disclosure
4. Duty of Obedience

Question 2

Duty of Loyalty

Answer 2

The duty of loyalty includes:
* account to partnership for any benefit received in conducting the partnership’s business or using partnership property;
* no taking positions adverse to the partnership;
* no competing with the partnership in the conduct of its business

The duty of loyalty requires a partner to put the interests of the partnership and the other partners before a partner’s own interests.

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 Obedience

Answer 4

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.

Question 5

Duty of Disclosure

Answer 5

• The Duty of Disclosure is a statutory duty rather than a fiduciary duty.
• A partner has a duty to provide complete and accurate information concerning the partnership.

Without demand, each partner and the partnership must provide to a partner any information concerning the partnership’s business and affairs reasonably required for proper exercise of the partner’s rights and duties.

On demand, a partnership and each partner must provide any other information concerning the partnership’s business and affairs.

Question 6

Elimination of Duties

Answer 6

• A partnership MAY NOT eliminate the duties of loyalty or care.
• The duty of disclosure may be eliminated.