FIDUCIARY RELATIONSHIP: A relationship in which an individual places complete

confidence, trust, and reliance in someone who has a fiduciary duty to act for the individual's
benefit.

Fiduciary Duties

There are various types of fiduciary duties owed by partners.

 Fiduciary Duty of Good Faith and Fair Dealing

The fiduciary duty of good faith and fair dealing means that the partners must act honestly and fairly in
their dealings pertaining to the partnership. This includes all acts in reaching the partnership’s mission
statement and goals, and includes daily operations. This duty starts at the partnership’s formation and
ends at the partnership’s dissolution.

 Fiduciary Duty of Loyalty

The fiduciary duty of loyalty means that the partners must place the partnership’s best interest above
their own personal interest. And partners shall avoid conflicts of interest between the partnership and
their personal dealings. In other words, partners may not act to harm the partnership’s goal for their
own gain.

 Fiduciary Duty of Care

The fiduciary duty of care is the duty to act prudently and competently towards all acts in managing the
partnership. The standard is based on what a reasonable person in that role would do. Additionally,
under the business judgment rule, if the partner acted under good faith and reasonable care, he will not
be liable even if the act turns out unfavorably.

 Fiduciary Duty of Disclosure

The fiduciary duty of disclosure is the duty to inform all material acts to other partners. They must tell
other partners about the consequences of their acts, and the overall business health. Moreover, if their
decision has a conflict of interest to it, then they must disclose this as well.