The Duty of Loyalty

Question 1

Duty of Loyalty (UPA)

Answer 1

Every partner must account to partnership for any benefit, and hold as trustee for it any profits derived by him without the consent of the other partners from any transaction connected with the formation, conduct, or liquidation of the partnership or from any use by him of its property.

Question 2

Duty of Loyalty (RUPA)

Answer 2

A partner’s duty of loyalty to the partnership and the other partners is limited to the following:

(1) to account to the partnership and hold as trustee for it any property, profit, or benefit
(2) to refrain from dealing with the partnership as or on behalf of a party having an interest adverse to the partnership
(3) to refrain from competing with the partnership in the conduct of the partnership business

Question 3

Pre-Empting Business Opportunities

Answer 3

Joint adventurers, like co-partners, owe to one another, while the enterprise continues, the duty of the finest loyalty.

RUPA: a partner does not violate a duty or obligation under this act, or under the partnership agreement, merely because the partner’s conduct furthers the partner’s own interest.