Duties of Partners to Each Other

 
Uniform Partnership Act
(§21 Partner Accountable as Fiduciary)
 
1)     Every partner must report and hold any benefits or profits he or she derives from any
transaction connected with the formation, conduct or liquidation of the partnership or
from any use by him or her of its property that occurred without the consent of the
partners.
2)     This duty also applies to representatives of deceased partners engaged in the
liquidation of the affairs of the partnership as the personal representatives of the last
surviving partner
 
Fiduciary Duty: partners are obligated to think first of the business and second of self,
primarily because in this form of business everyone is dependent on one another and is
susceptible to liability on account of the other’s conduct.
 

Meinhard v. Salmon 

 
Rule: when the subject of a new prospect is an extension and enlargement of the subject
matter of an old arrangement to which parties are co-partners, each partner is entitled to
the benefit of that new prospect and owes it to the other to provide equal opportunity to it.
Fiduciary duty isn’t waive able but parties can stipulate things from the outset that wont be
a violation of their fiduciary duties

HYPO:
- Truckers Company, own a bunch of trucks
- Makes arrangements with other companies with respect to those trucks
- Cupcake co makes an arrangement (contract) with Truckers
o For percentage of profits, and so long as you keep min amount of reserve and pay
out salary and expenses, truckers will keep the rest of the money.
o If you have a truck parked somewhere and selling merch  insurance is very low.
o All these companies, including Cupcake takes out min insurance
o All these companies contracting with Truckers, they all do different things.
o Cupcake co backs into a bunch of college students with significant tort liability.
o Students want to sue truckers:
 Analysis
 Extension of enterpirse
 These are not sibling companies
 Truckers is not a shareholder
 Companies are loosely connected through contract
 Truckers are benefitting from taking all the profits
 Ask: Are they in a partnership? They don’t have protection if they
are a partnership