Duty of good faith• uberimae fidei or mutual faith and trust. • S 30: duty of partners of render accounts, etc. • Partners are bound to render true accounts and full

information of all things affecting the partnership to any partner or his legal representatives.-there must be full disclosure

• Vasu Devan v V A Nair, the court held that duty of good faith is a mutual duty owed towards each other. If any dispute arising out of the transaction shows that one partner seeks to benefit at the expense of the firm, he must make sure he had complied with the law.

Fiduciary duty• Law v Law, William and James Law were partners in

a woolen manufacturer’s business. William took little part in running the business. James bought william’s share for 21,000. Later he discovered that the business was worth considerably and more and that various assets unknown to him has not been disclosed.

 • C/A held that the contract could be rescinded. There

was a duty owed by the purchaser who knows of some information affecting the partnership. Thus, he must not conceal this from the seller.

• Here caveat emptor does not apply

Fiduciary duty• S 31: accountability of partners for private profits.• (1)account to the firm for any benefit derived by him from

any transaction concerning the partnership or from any use by him of the partnership property, name, or business connection.

• “any use of the business connection” can go beyond the use of partnership assets/ exploitation of partnership transaction.

• Thus, the duty of good faith does not allow partners to make individual profit or to take advantage of the firm’s business. It does not matter whether the firm suffers any loss or not.

• So long there is personal benefit made by a partner, he must account to the other partners that benefit.

• “benefit” here does not only refers to pecuniary (benefit in term of money). It includes any other benefit.

Fiduciary duty• Bentley v Craven, bentley, craven and two others

were partners in a sugar refinery. Craven was the firm’s buyer thus he was able to buy sugar at a discount on a market price.

• The other partners later found out that he had been buying and selling the sugar to them on his own behalf.

• The firm successfully claimed his profits from these dealings. It would have made no difference if the other partners could not have obtained a discount so that in fact they suffered no loss since they would have to pay the market price anyway.

Fiduciary duty• Boston Deep Sea Fishing & Ice Co v Ansell, a

case involving a director who made personal profit, the court held that even though the company could not have obtained the discount, the director had to account for it as a personal profit.

 • Dunne v English, one partner was authorised to sell

the firm’s property on a fixed price. All the partners agreed that such selling will be divided equally. The property was however sold at a higher price without the knowledge of the other partners.

The court held that the profit from the selling of the property must be divided equally among partners.

Fiduciary duty• S 31(2) this section applies also to transactions undertaken

after a partnership has been dissolved by the death of a partner, and before the affairs thereof have been completely wound up, either by any surviving partner or by the representatives of the deceased partner.

•  • To illustrate, Clegg v Fishwick. the pltf was the administrix

of a partner in a coal mine. She commenced proceedings against the surviving partners some years after the date of the death. She sought an account and a dissolution, and a declaration that a renewed lease which had been obtained by the defendants was held in trust for the benefit of the old partnership.

• It was held that the lease was the foundation for the new lease and that where parties are jointly interested in a lease, some of them cannot take the benefit of a renewal to the exclusion of the others.

Fiduciary duty• S 32: DUTY OF PARTNER NOT TO COMPETE

WITH FIRM a partner should avoid CONFLICT OF DUTY AND

INTEREST• 3 elements: • same nature of business• competing with the firm’s business• without the consent of the other partners.In Aas v Benham, it was held that a ship building

business was neither the same as nor in competition with the firm’s business of ship-broking.

Fiduciary duty • The dfdt was a member of a firm of shipbrokers dealing with the

chartering of the vessel. He gave assistance in the formation of a company whose objects were of building ships. He used information and experience gained as a shipbroker in the promotion of the company. He was paid a fee for the work and was later made a director of the company at a salary.

• The other partners sought to claim an account of the fee and the salary.

 • The court rejected the claim and stated that information gained in

the course of a partnership business could not be used for a partner’s own benefit in that type of business, but using it for purposes outside the scope of that business was allowed.

Fiduciary duty• However, publication of a morning newspaper and an

evening newspaper were held to be of the same nature in Glassington v Twaites

• The difference between s 31 and 32:- S 31 requires misuse of a partnership asset etc giving

rise to a personal profit but it does not require competition with the firm whereas

 S 32 requires competition but no use of partnership

assets.