A business partnership can be a fruitful relationship. Partners who are on the same page can jointly tackle finding new customers and keeping existing ones. The legal and financial responsibilities of the company can also be shared.
Business partners have fiduciary duties. While these vary, they all have a familiar theme- the best interests of the company should come first. What fiduciary duties do business partners have?
The duty to be honest
Honesty is at the center of a business partner’s fiduciary duties. Partners need to be able to trust one another and communicate effectively. This can only happen if the partnership is founded on trust and transparency. When a business partner lies, the previously advantageous relationship can soon turn into a detriment.
The duty to be loyal
Loyalty is also part of the fiduciary duties of a business partner. The partner must prioritize the best interests of the company. They should not engage in transactions purely for personal profit (also known as self-dealing). While partners may be involved in multiple other projects, these should not come into direct conflict with the business.
The duty to be careful
Partners also have a duty to be cautious, particularly when it comes to financial investments. Mistakes can happen, but honest errors are different from negligent actions. If a partner is reckless with company assets, then this is a breach of fiduciary duty.
Fiduciary duties can be outlined more thoroughly in a partnership agreement. Whether you are looking to draw up a contract or resolve a dispute, we can help you. Call us today to arrange a consultation.
