Partnerships - Fiduciary Duties

Front 1

What are the fiduciary duties applicable to partners?

Back 1

The duties of:
(i) care (§3232A.0404);
(ii) loyalty (§3232A.0404);
(iii) disclosure (§3232A.0403(c)(1)); and
(iv) obedience (§3232A.0405(a)).

Front 2

What obligations does the duty of disclosure entail?

Back 2

The duty of disclosure requires all partners to disclose, without demand, information concerning the partnership and its business reasonably required for the partners to perform their duties and obligations. This includes any potential self-dealing transactions or similar acts which relate to the business (Meinhard v. Salmon).

Partners are entitled to demand any other information concerning the partnership's business affairs, except if the demand is unreasonable or improper.

(§323A.0403(c)(1))

Front 3

What does the duty of loyalty entail?

Back 3

(i) The duty to account to the partnership, and to hold any profit, property, etc. derived in the conduct/winding up of the partnership as a trustee.

(ii) Refraining from appropriating corporate opportunities.

(iii) Where the partnership is being wound up, refraining from acting in an adverse manner.

(iv) Refraining from competing with the partnership before its dissolution.

(§323A.0404)

Front 4

What does the duty of care entail? Are any other duties applicable to partners?

Back 4

Refraining from grossly negligent/reckless conduct, intentional misconduct and knowing violation of law.

Other duties:
(i) good faith; and
(ii) fair dealing.

(§323A.0404)

Front 5

What constitutes breach of the duty of obedience?

Back 5

A breach of the partnership agreement or a duty to the partnership that results in harm to the partnership.

(§323A.0405(a))