§ 8447 — Standards of conduct for partners

Pennsylvania § 8447

• Jurisdiction: Pennsylvania
• Title 15: CORPORATIONS AND UNINCORPORATED ASSOCIATIONS
• Part: PART III
• Ch. 84: GENERAL PARTNERSHIPS
• Subch.: RELATIONS OF PARTNERS TO EACH OTHER

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(a) General rule.--A partner owes to the partnership and the other partners the duties of loyalty and care stated in subsections (b) and (c).

(b) Duty of loyalty.--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:

(i) in the conduct or winding up of the partnership's business;

(ii) from a use by the partner of the partnership's property; or

(iii) 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) Duty of care.--The duty of care of a partner in the conduct or winding up of the partnership business is to refrain from engaging in gross negligence, recklessness, willful misconduct or a knowing violation of law.

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

(e) Self-serving conduct.--A partner does not violate a duty or obligation under this title or under the partnership agreement solely because the partner's conduct furthers the partner's own interest.

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

(g) Fairness as a defense.--It is a defense to a claim under subsection (b)(2) and any comparable claim in equity or at common law that the transaction was fair to the partnership at the time it was authorized or ratified under subsection (f).

(h) Rights and obligations in approved transaction.--If a partner enters into a transaction with the partnership which otherwise would be prohibited under subsection (b)(2), but the transaction is authorized or ratified as provided under subsection (f) or the partnership agreement, the partner's rights and obligations arising from the transaction are the same as those of a person that is not a partner.

(i) Exoneration.--The partnership agreement may provide that a partner shall not be personally liable for monetary damages to the partnership or the other partners for a breach of subsection (c), except that a partner may not be exonerated for an act that constitutes recklessness, willful misconduct or a knowing violation of law.

(j) Cross reference.--See section 8415 (relating to contents of partnership agreement).

Legislative History

Cross References.Section 8447 is referred to in sections 8231, 8232, 8415, 8441, 8461, 8463 of this title.