30-23-409. STANDARDS OF CONDUCT FOR PARTNERS. (a) A partner owes to the partnership and the other partners the duties of loyalty and care stated in subsections (b) and (c) of this section.

(b) The fiduciary duty of loyalty of a partner includes the duties:

(1) To account to the partnership and hold as trustee for it any property, profit, or benefit derived by the partner:

(A) In the conduct or winding up of the partnership’s business;

(B) From a use by the partner of the partnership’s property; or

(C) From 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 person having an interest adverse to the partnership; and

(3) To refrain from competing with the partnership in the conduct of the partnership’s business before the dissolution of the partnership.

(c) The duty of care of a partner in the conduct or winding up of the partnership business is to refrain from engaging in grossly negligent or reckless conduct, willful or intentional misconduct, or a knowing violation of law.

(d) A partner shall discharge the duties and obligations under this chapter or under the partnership agreement and exercise any rights consistently with the contractual obligation of good faith and fair dealing.

(e) A partner does not violate a duty or obligation under this act or under the partnership agreement solely because the partner’s conduct furthers the partner’s own interest.

(f) All the partners may authorize or ratify, after full disclosure of all material facts, a specific act or transaction by a partner that otherwise would violate the duty of loyalty.

(g) It is a defense to a claim under subsection (b)(2) of this section and any comparable claim in equity or at common law that the transaction was fair to the partnership.

(h) If, as permitted by subsection (f) of this section or by the partnership agreement, a partner enters into a transaction with the partnership that otherwise would be prohibited by subsection (b)(2) of this section, the partner’s rights and obligations arising from the transaction are the same as those of a person that is not a partner.

History:

[30-23-409, added 2015, ch. 243, sec. 26, p. 822.]