Rhode Island General Laws 7-13.1-409. Standards of conduct for general partners
(a) A general partner owes to the limited partnership and, subject to § 7-13.1-901, the other partners the duties of loyalty and care stated in subsections (b) and (c) of this section.
Terms Used In Rhode Island General Laws 7-13.1-409
- Appropriation: The provision of funds, through an annual appropriations act or a permanent law, for federal agencies to make payments out of the Treasury for specified purposes. The formal federal spending process consists of two sequential steps: authorization
- Common law: The legal system that originated in England and is now in use in the United States. It is based on judicial decisions rather than legislative action.
- Fiduciary: A trustee, executor, or administrator.
- General partner: means a person that:
(i) Has become a general partner under Rhode Island General Laws 7-13.1-102
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Partner: means a limited partner or general partner. See Rhode Island General Laws 7-13.1-102
- Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
- Partnership agreement: means the agreement, whether or not referred to as a partnership agreement and whether oral, implied, in a record, or in any combination thereof, of all the partners of a limited partnership concerning the matters described in Rhode Island General Laws 7-13.1-102
- Person: means an individual, business corporation, nonprofit corporation, partnership, limited partnership, limited liability company, general cooperative association, limited cooperative association, unincorporated nonprofit association, cooperative housing corporation, workers' cooperative, producers' cooperative, consumer's cooperative, statutory trust, business trust, common-law business trust, estate, trust, association, joint venture, public corporation, government or governmental subdivision, agency, or instrumentality, or any other legal or commercial entity. See Rhode Island General Laws 7-13.1-102
- Property: means all property, whether real, personal, or mixed or tangible or intangible, or any right or interest therein. See Rhode Island General Laws 7-13.1-102
- Trustee: A person or institution holding and administering property in trust.
(b) The fiduciary duty of loyalty of a general partner includes the duties:
(1) To account to the limited partnership and hold as trustee for it any property, profit, or benefit derived by the general partner:
(i) In the conduct or winding up of the partnership’s activities and affairs;
(ii) From a use by the general 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’s activities and affairs 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 or winding up of the partnership’s activities and affairs.
(c) The duty of care of a general partner in the conduct or winding up of the limited partnership’s activities and affairs is to refrain from engaging in grossly negligent or reckless conduct, willful or intentional misconduct, or knowing violation of law.
(d) A general partner shall discharge the duties and obligations under this chapter or under the partnership agreement and exercise any rights consistently with the contractual obligation of good faith and fair dealing.
(e) A general partner does not violate a duty or obligation under this chapter or under the partnership agreement solely because the general partner’s conduct furthers the general partner’s own interest.
(f) All the partners of a limited partnership may authorize or ratify, after full disclosure of all material facts, a specific act or transaction by a general partner that otherwise would violate the duty of loyalty.
(g) It is a defense to a claim under subsection (b)(2) of this section and any comparable claim in equity or at common law that the transaction was fair to the limited partnership.
(h) If, as permitted by subsection (f) of this section or the partnership agreement, a general partner enters into a transaction with the limited partnership which otherwise would be prohibited by subsection (b)(2) of this section, the general partner’s rights and obligations arising from the transaction are the same as those of a person that is not a general partner.
History of Section.
P.L. 2022, ch. 121, § 2, effective January 1, 2023; P.L. 2022, ch. 122, § 2, effective January 1, 2023.