Fiduciary Obligations of Partners Question and answers verified to pass 2024/2025
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Module
WCJC
Institution
WCJC
Fiduciary Obligations of Partners Question and answers verified to pass 2024/2025 Fiduciary Obligations of Partners (Class #4)
What are the 2 Partnership Fiduciary Duties? - correct answer RUPA 409 (a)
A partner owes to the partnership
(1) Duty of loyalty and (2) Duty of care
Duty of Go...
fiduciary obligations of partners question and ans
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Fiduciary Obligations of Partners (Class
#4)
What are the 2 Partnership Fiduciary Duties? - correct answer ✔RUPA 409
(a)
A partner owes to the partnership
(1) Duty of loyalty and (2) Duty of care
Duty of Good Faith (RUPA 409) (not one of the 2 fiduciary duties) - correct
answer ✔RUPA 409 (d) says that partners will carry out their duties and
obligations under agreement and exercise rights consistently with K
obligations of good faith and fair dealings
Aka: Duty of good faith is what partners owe each other and they have an
obligation to use it when carrying out the 2 fiduciary duties they owe and any
of their business for the partnership.
Partnership Duty of Care (Default Rule) - correct answer ✔RUPA 409 (c)
(default rule)
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.
Does Duty of Care cover refraining from simple negligence acts? - correct
answer ✔No liability for mere negligence
Can the Partnership Agreement alter the Duty Care? - correct answer ✔Yes,
depending.
RUPA (105) (d)(3):
, If not manifestly unreasonable, the partnership agreement may:
(C) alter the duty of care, but may not authorize conduct involving bad faith
willful or intentional misconduct, or knowing violation of law; and
(D) alter or eliminate any other fiduciary duty
Duty of Loyalty (3 things Partners should refrain from) - correct answer
✔RUPA 409(b)
(1) to account to the partnership and hold as trustee for it any property, profit
or benefit derived
(A) in the conduct or winding up of the partnership business;
(B) from a use gy ther partner of the partnership property; or
(C) from the appropriation of a partnership opportunity;
(2) Refrain from self-dealings...adverse to the partnership
(3) to refrain from competing
Can the Partnership Agreement alter Duty of Loyalty? - correct answer ✔Yes
conditionally.
RUPA 105(d)(3)
If not manifestly unreasonable, the partnership agreement may:
(A) alter or eliminate the aspects of the duty of loyalty stated in Section 409(b)
(B) identify specific types or categories of activities that don't violate the duty
of loyalty;
(D) alter or eliminate any other fiduciary duty
What are 4 examples of breaching Duty of Loyalty? - correct answer ✔(1)
competing w/ the partnership
(2) taking a business opportunity away from the partnership
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