When people enter into a partnership agreement, they will often owe their business partners certain fiduciary duties. These duties are intended to prevent conflict, ensure success of the business, and maintain positive business relationships. Business partners are typically held to these duties from the formation of the partnership to its dissolution. Partnership disputes can occur when these fiduciary duties are breached. You may be wondering ‘what duties do I owe my business partner?’
Depending on the type of partnership, the fiduciary duties may vary. For general partners, the partners have managerial responsibilities and typically owe each other fiduciary duties. On the other hand, limited partners do not have managerial responsibility and often do not owe the same fiduciary duties.
A few factors that impact fiduciary duties:
- State statutes;
- The partnership agreement; and,
- Cases in the applicable state.
Some duties that may be applicable include:
Fiduciary Duty of Good Faith and Fair Dealing
This duty requires honesty and acting in good faith towards one another. Even if the partnership becomes strained, partners must continue to act in good faith.
Fiduciary Duty of Loyalty
This duty requires that partners must be loyal to the company and their partners. This means that they must avoid conflict of interest and self-dealing. If they have a conflict of interest, they must disclose this to their partner.
Additionally, business partners should not secretly profit from the company. They should not use business assets and intellectual property to form competing ventures. They may not compete with the business while still employed.
Fiduciary Duty of Care
This fiduciary duty requires partners to act with competence in everyday operations. In other words, the partner is operating within the requirements of the position.
If your business partner is not complying with fiduciary duties to you, you may have a claim. Our experienced Chicago business litigators can help with your partnership dispute. Contact us today at (312) 223-1699.