Rights of Partners Among Themselves

Question 1

Rights to manage and control P’ship, general v limited P’s

Answer 1

Absent an agreement to the contrary, general partners have equal rights to manage and control the partnership’s business, while limited partners generally have no say in such matters.

Disagreements relating to ordinary matters connected with the business of the partnership are decided by a majority of the partners.

Question 2

How may P use P’ship property?

Answer 2

Absent an agreement to the contrary, a partner may ONLY use partnership property:

On behalf of the partnership;

OR

to carry out the business of the P’ship

Question 3

Personal use of p’ship property requires…

Answer 3

consent of the other P’s.

Question 4

What right to P’s have to access books and records?

Answer 4

Absent an agreement to the contrary, every partner MUST have access to the partnership’s books and records during normal business hours; and upon reasonable demand, the partnership MUST render true and full information of all things regarding the affairs of the partnership that is just and reasonable under the circumstances.

Question 5

Does P need a purpose to inspect books and records?

Answer 5

NO.
A partner’s right to inspect the partnership’s records is NOT conditioned on the partner’s purpose or motive.
However, an abuse of these rights may constitute a violation of the obligation of good faith and fair dealing.

Question 6

What is P’s rights to profits and losses?

Answer 6

Absent an agreement to the contrary, each partner is generally:

1. Entitled to an equal share of the partnership profits; AND
2. Responsible for a share of the partnership losses in proportion to the partner’s
   share of the profits.

Question 7

What is P’s duty of care?
What if P breaches?

Answer 7

Each partner owes a limited fiduciary duty of care to the partnership and other partners, which requires that each partner REFRAIN from engaging in:

1. Grossly negligent or reckless conduct;
2. Intentional misconduct;

OR

3. A knowing violation of the law.

If a partner breaches the duty of care, he may be held personally liable for damages.

Question 8

What is P’s duty of loyalty?
What if P breaches?

Answer 8

Each partner owes a fiduciary duty of loyalty to the partnership and other partners, which requires that each partner:

1. Act in good faith and fairly toward the other partners;
2. Account for any property, profit, or benefit derived by the partner from the partnership business or property;

AND

3. REFRAIN from:Competing with the partnership within the scope of the business (even during dissolution); AND
   Usurping a business opportunity that properly belongs to the partnership.

If a partner BREACHES the duty of loyalty, he may be held personally liable for damages

Question 9

Can P’s remove duty of loyalty by agreement?

Answer 9

Yes, the duty of loyalty may be eliminated in the partnership agreement if reasonable.