Duties Within the Partnership

Question 1

When is a partner personally liable to the partnership?

Answer 1

A partner is personally liable to the partnership and the other partners for damages caused by a breach of fiduciary duty.

Question 2

General Partner’s Duty of Care

Answer 2

Can’t engage in:

(1) grossly negligent or reckless conduct,
(2) intentional conduct that harms the partnership, OR
(3) knowing violation of the law.

Applies to general partners in GP or LP. Applies during partnership and throughout winding-up process.

Question 3

General Partner’s Duty of Loyalty

Answer 3

Can’t:

(1) compete with the partnership or appropriate a partnership opportunity, OR
(2) enter deals with the partnership that are adverse to the partnership’s interest.

A partner who does must account for any benefit and hold any profit in trust.

Applies to general partners in a GP or LP.

Question 4

Duty to Disclose to General Partners

Answer 4

WITHOUT DEMAND - any info related to partnership and reasonably required to exercise a partner’s rights and duties under PA.

ON DEMAND - any other info concerning partnership if the demand is reasonable and made for a proper purpose.

Question 5

Duty to Disclose to Limited Partners

Answer 5

Must provide the opportunity to inspect financial and tax records, and other documents reasonably related to the limited partner’s interest in the LP (i.e., financial interest).

Question 6

Duties of Limited Partners

Answer 6

Good faith and fair dealing.