Simply put, a partner must respect and look out for the interests of the partnership and other partners over and above their own personal interests. That is what a fiduciary is supposed to do. In many more words, the legislature explains the legal obligations of a partner. Relevant portions of California Corporations Code, Section 16404 are set forth below:
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(a) The fiduciary duties a partner owes to the partnership and the other partners are the duty of loyalty and the duty of care set forth in subdivisions (b) and (c).
(b) A partner’s duty of loyalty to the partnership and the other partners includes all of the following:
(1) To account to the partnership and hold as trustee for it any property, profit, or benefit derived by the partner in the conduct and winding up of the partnership business or derived from a use by the partner of partnership property or information, including the appropriation of a partnership opportunity.
(2) To refrain from dealing with the partnership in the conduct or winding up of the partnership business 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 before the dissolution of the partnership.
(c) A partner’s duty of care to the partnership and the other partners in the conduct and winding up of the partnership business is limited to refraining from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law.
(d) A partner shall discharge the duties to the partnership and the other partners under this chapter or under the partnership agreement and exercise any rights consistently with the obligation of good faith and fair dealing.
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If you sense or are aware of conduct that runs afoul of the above, or if you have a question or two on just what real life circumstances delineate the “duty of loyalty” and “duty of care,” feel free to call our office as we have extensive experience litigating and resolving partnership disputes.