Numerous partnership fiduciary duty issues arise in everyday business situations. Partnerships must be able to trust and rely upon the partners managing the partnership to promote the best interests and success of the partnership, rather than the partners’ own interests. Partners must act honestly and in good faith and must place the success and interests of the partnership above their own personal interests. Partners must also act in a reasonably prudent manner when directing and/or managing the partnership.
With regard to general partnerships and limited partnerships, the fiduciary duties of partners to one another and the partnership are generally enumerated in the Partnership Act or in contract. Generally, the statutory provisions or the contract provisions require the partners to deal fairly with each other, with the partnership, and if applicable, with the limited partners, or else they are subject liability for breach of fiduciary duty. The most common of these partnership fiduciary duty matters our Chicago commercial litigation attorneys see include:
- Duty of Care
- Duty of Loyalty
- Duty to Account
- Duty of Confidentiality
- Duty of Full Disclosure
- Duty to Act Fairly
- Duty of Good Faith and Fair Dealing
Breach of Partnership Fiduciary Duty
The important fiduciary duty between partners in a general partnership or limited partnership is one of the more critical aspects of a partnership. The duties between partners are obviously reciprocal. This is because the very nature of a general partnership or a limited partnership necessitates that all partners deal fairly with one another.
Addressing these common breach of fiduciary duty issues is only the beginning of the legal analysis. In short, whenever one party places trust and confidence in a second person with that second person’s knowledge, specifically in the business or corporate context, it is very possible that a fiduciary relationship is established. When the fiduciary relationship is established, either under statute or in a contractual context, the idea is to impose on the fiduciary the duty to act in the best interest of the trusting party.