Obligations of a Fiduciary

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Questions and Answers

What is the primary duty of a fiduciary, and what does it entail?

The primary duty of a fiduciary is to exercise the utmost good faith and loyalty, which means not acting in their own self-interest and behaving adversely to whomever they represent.

What is the consequence of failing to disclose information as a fiduciary?

Failure to disclose information constitutes a breach of fiduciary duty.

What are the fiduciary duties that partners owe to each other in a general partnership?

Partners owe each other fiduciary duties of loyalty, care, and to account.

What is the extent of personal liability for each partner in a partnership?

Each partner is personally liable for the full amount of all obligations of the partnership. Signup and view all the answers

What is the requirement for approving a particular act within the ordinary course of partnership business?

A majority of partners must approve a particular act within the ordinary course of partnership business. Signup and view all the answers

What must a judgment creditor do first in seeking satisfaction of a judgment against a partnership?

Seek satisfaction from the partnership, and then from the partners personally to the extent not covered by partnership assets. Signup and view all the answers

What is the duty of a partner to the partnership regarding profits, property, opportunities, or other benefits?

A partner must account for profits, property, opportunities, or other benefits derived by them in conjunction with the partnership business. Signup and view all the answers

What is required to form a limited partnership?

A certificate of limited partnership must be filed with the secretary of state and signed by all general partners. Signup and view all the answers

Can a partner compete with the partnership?

No, a partner must not compete with the partnership. Signup and view all the answers

What happens to a partner's liability when they dissociate from a partnership?

The partner's dissociation does not affect their liability for partnership obligations that occurred before dissociation. Signup and view all the answers

What is the duty of a partner to disclose opportunities that arise from the business?

A partner must disclose opportunities that arise from the business. Signup and view all the answers

What happens to a partnership when one partner dissociates?

The partnership is dissolved, but not terminated, and the remaining partners must wind up the partnership. Signup and view all the answers

What is the default management structure of a general partnership, absent an agreement otherwise?

Each partner has an equal right to manage the business of the partnership. Signup and view all the answers

What is the scope of a partner's authority after dissolution?

A partner only has authority to do what is needed to wind up the partnership. Signup and view all the answers

What is the fiduciary duty of an agent to an employer?

The agent must exercise the utmost good faith and loyalty, acting to the furtherance and advancement of the employer's interests. Signup and view all the answers

What is the relationship between an agent and principal?

The agent acts on the principal's behalf and is subject to the principal's control. Signup and view all the answers

Study Notes

Fiduciary Obligations

Duty of Loyalty: no conflicts of interest, cannot usurp corporate opportunities for personal advantage, engage in self-dealing, or compete with the partnership
Duty of Confidentiality: maintain confidentiality
Duty of Good Faith: serving the other person's interest
Duty of Care: duty to act with ordinary care
Duty of Account: to account for any profit and hold it as a trustee for the partnership
Duty of Disclosure: failure to disclose information is a breach of fiduciary duty

Partnership

A general partnership is formed when two or more people associate to carry on as co-owners a business for profit
Partners owe each other fiduciary duties of loyalty, care, and to account
Partners have equal rights in the business
Partners have a fiduciary duty to share in any benefits that result from the joint venture
Must disclose opportunities that arise from the business

Partnership Management

Partners have an equal right to manage the business of the partnership, absent an agreement otherwise
A particular act within the ordinary course of partnership business must be approved by a majority of partners

Liability

Partners are jointly and severally liable for all obligations of the partnership
Each partner is personally liable for the full amount
A judgment creditor must first seek satisfaction of any judgment from the partnership, and then from the partners personally to the extent not covered by partnership assets

Limited Partnership

A limited partnership is comprised of at least one general partner and one limited partner
A certificate of limited partnership must be filed with the secretary of state and signed by all general partners
Limited liability does not apply for anything that happened prior to the statement of qualification being filed

Dissociation and Dissolution

A partner is dissociated from a partnership upon notice of the partner's express will to withdraw as a partner
A partner's dissociation causes the partnership's dissolution
Upon dissolution, partners only have authority to do what is needed to wind up the partnership
Dissolution does not terminate the partnership, but triggers winding up of the partnership

Agency

An agent owes a fiduciary duty to an employer
An agent must exercise the utmost good faith and loyalty, acting to the furtherance and advancement of the employer's interests
An agent must avoid acting adversely to the employer's interests and cannot use their position to acquire a private interest of their own
Agency is the fiduciary relationship that exists between an agent and principal where the agent acts on the principal's behalf and is subject to the principal's control

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Description

Learn about the duties and responsibilities of a fiduciary, including loyalty, care, accountability, and disclosure. Understand the importance of avoiding conflicts of interest and acting in good faith.