Chapter 38 - Operation of partnerships and related forms. In this chapter students will be able to: List and explain duties partners owe to the partnership and each other, explain why partnership agreements can resolve issues about partners’ management and compensation rights, describe the liability of partners for torts and contracts. | Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 9 Introduction to Forms of Business and Formation of Partnerships Operation of Partnerships and Related Forms Partners’ Dissociation and Partnerships’ Dissolution and Winding Up Limited Liability Companies, Limited Partnerships, and Limited Liability Limited Partnerships Partnerships P A R T Operation of Partnerships and Related Forms P A E T R H C 38 It is not the individual but the team that is the instrument of sustained and enduring success in management. Anthony Jay, quoted in Management Teams – Why They Succeed (R. Meredith Belbin, 1984) Learning Objectives List and explain duties partners owe to the partnership and each other Explain why partnership agreements can resolve issues about partners’ management and compensation rights Describe the liability of partners for torts and contracts Revised Uniform Partnership Act (RUPA) states that partners owe to the partnership and each other . | Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 9 Introduction to Forms of Business and Formation of Partnerships Operation of Partnerships and Related Forms Partners’ Dissociation and Partnerships’ Dissolution and Winding Up Limited Liability Companies, Limited Partnerships, and Limited Liability Limited Partnerships Partnerships P A R T Operation of Partnerships and Related Forms P A E T R H C 38 It is not the individual but the team that is the instrument of sustained and enduring success in management. Anthony Jay, quoted in Management Teams – Why They Succeed (R. Meredith Belbin, 1984) Learning Objectives List and explain duties partners owe to the partnership and each other Explain why partnership agreements can resolve issues about partners’ management and compensation rights Describe the liability of partners for torts and contracts Revised Uniform Partnership Act (RUPA) states that partners owe to the partnership and each other the highest degree of loyalty and must act consistently with the obligation of good faith and fair dealing (a fiduciary relationship) Same duty applies to all forms of partnership Duties of Partners to Partnership and Each Other Fiduciary: One who holds goods in trust for another or one who holds a position of trust and confidence. Basically, partners are pulling for the same team and we all know what happens when one of the team stops pulling. Partners have duties to serve, account for use or disposal of partnership funds, act within actual authority, avoid interests adverse to the partnership, disclose material information, and maintain the confidentiality of partnership information Exception: “silent” partners do not serve Partners may compete with the partnership only upon the consent of other partners General Duties Each partner owes a duty of care in doing partnership business A partner isn’t liable to the partnership for honest errors in judgment (negligence), but is .
