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Fiduciary duties in partnerships

| Jul 3, 2020 | Firm News |

Being a Pennsylvania business owner comes with vast and varied responsibilities. If you have partners, you owe each other and the organization a fiduciary duty. A breach of duty can destroy the foundation of the partnership, resulting in a loss of trust and revenue. We have experience representing partners addressing the fiduciary negligence of one or more partners. 

According to the American Bar Association, general partners, managing members and upstream managers in partnerships owe the organization and its interests a fiduciary duty. These broad duties include the following: 

Duties of care and loyalty 

The duty of care includes acting competently and prudently, in the best interest of the partnership. The fiduciary duty of loyalty consists of putting the partnership’s best interests first and avoiding conflicts of interest between personal and business dealings. If one or more of your partners act on their personal preferences instead of the organization, a breach of duty may exist. 

Duties of disclosure, good faith and fair dealing 

Partners have the legal obligation to inform their other partners about material acts and their consequences. This duty also requires that he or she notify you if a conflict of interest arises as a result of their actions. Good faith and fair dealing require that all acts related to the partnership be honest and fair, from daily operations to the organization’s mission and goals. 

If you believe that there is a breach of the fiduciary duty of any kind, taking action immediately could save your business. In some situations, you may avoid court, but these cases often require litigation. 

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