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Uniform Partnership Act: Meinhard v. Salmon

Partners owe each other fiduciary duties under the Uniform Partnership Act. This includes duties to [1] report and hold any benefits or profits derived from transactions connected to the partnership without partner consent and [2] applies to representatives of deceased partners during partnership liquidation. The fiduciary duty requires partners to prioritize the business over self-interest because partners are dependent on each other and jointly liable for actions of others. Additionally, if a new business opportunity is an extension of an existing partnership arrangement, partners must provide equal opportunity to the new prospect.

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46 views2 pages

Uniform Partnership Act: Meinhard v. Salmon

Partners owe each other fiduciary duties under the Uniform Partnership Act. This includes duties to [1] report and hold any benefits or profits derived from transactions connected to the partnership without partner consent and [2] applies to representatives of deceased partners during partnership liquidation. The fiduciary duty requires partners to prioritize the business over self-interest because partners are dependent on each other and jointly liable for actions of others. Additionally, if a new business opportunity is an extension of an existing partnership arrangement, partners must provide equal opportunity to the new prospect.

Uploaded by

fshahk
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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 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

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