In a District of Columbia general partnership, a partner’s fiduciary duties are stated exhaustively by statute — D.C. Code § 29–604.07 says these are “the only fiduciary duties a partner owes.” That single word governs most partnership disputes: a claim has to fit the duty of loyalty or the duty of care as the statute defines them. The other two questions that decide these cases are whether a partner has been dissociated (§ 29–606.01) and whether the partnership is being dissolved and wound up (§ 29–608.01).
What duties does a partner actually owe?
The statute is deliberately closed-ended. That cuts both ways — it protects partners from open-ended claims, and it means a genuine grievance has to be pleaded within the statutory duties or under the partnership agreement.
(a) The only fiduciary duties a partner owes to the partnership and the other partners are the duty of loyalty and the duty of care set forth in subsections (b) and (c) of this section. (b) A partner’s duty of loyalty to the partnership and the other partners include the following: (1) To account to the partnership and hold as trustee for it any property, profit, or benefit derived by the partner in the conduct and winding up of the partnership business or derived from a use by the partner of partnership property, including the appropriation of a partnership opportunity; (2) To refrain from dealing with the partnership in the conduct or winding up of the partnership business as or on behalf of a party having an interest adverse to the partnership; and (3) To refrain from competing with the partnership in the conduct of the partnership business before the dissolution of the partnership.
D.C. Code § 29–604.07 — General standards of partner’s conduct
The loyalty limb is the same account-and-hold-as-trustee formulation used for LLC members, so where a partner has taken money or an opportunity see partner diverting company funds and breach of fiduciary duty.
Who owns what — and what is a partner’s account?
(a) Each partner shall deemed to have an account that is: (1) Credited with an amount equal to the money plus the value of any other property, net of the amount of any liabilities, the partner contributes to the partnership and the partner’s share of the partnership profits; and (2) Charged with an amount equal to the money plus the value of any other property, net of the amount of any liabilities, distributed by the partnership to the partner and the partner’s share of the partnership losses. (b) Each partner shall be entitled to an equal share of the partnership profits and shall be chargeable with a share of the partnership losses in proportion to the partner’s share of the profits. (c) A…
D.C. Code § 29–604.01 — Partner’s rights and duties
Contributions are not limited to cash: § 29–604.03 provides that a contribution may consist of property transferred, services performed, or other benefit provided, or an agreement to do so — which is frequently the disputed fact in a partnership fallout.
What happens when a partner leaves?
Departure is a defined statutory event, not simply a decision to stop turning up.
A partner shall be dissociated from a partnership when: (1) The partnership has notice of the partner’s express will to withdraw as a partner or on a later date specified by the partner; (2) An event agreed to in the partnership agreement as causing the partner’s dissociation occurs; (3) The partner is expelled pursuant to the partnership agreement; (4) The partner is expelled by the unanimous vote of the other partners if: (A) It is unlawful to carry on the partnership business with that partner; (B) There has been a transfer of all or substantially all of that partner’s transferable interest in the partnership, other than a transfer for security purposes, or a court order charging the partner’s interest, which has not been foreclosed; (C) Within 90 days after the partnership notifies a corporate partner that it will be expelled because it has filed a certificate of dissolution or the e…
D.C. Code § 29–606.01 — Events causing partner’s dissociation
When is the partnership dissolved?
Again the statute is closed-ended — note the word “only”.
A partnership is dissolved, and its activities and affairs shall be wound up, only upon the occurrence of any of the following events: (1) In a partnership at will, the partnership’s having notice from a partner, other than a partner that is dissociated under § 29-606.01(2) through (10), of that partner’s express will to withdraw as a partner, or on a later date specified by the partner; (2) In a partnership for a definite term or particular undertaking: (A) Within 90 days after a partner’s dissociation by death or otherwise under § 29-606.01(6) through (10) or wrongful dissociation under § 29-606.02(b) , the express will of at least half of the remaining partners to wind up the partnership’s activities and affairs, for which purpose a partner’s rightful dissociation pursuant to § 29-606.02(b)(2)(A) constitutes the expression of that partner’s will to wind up the partnership’s activities…
D.C. Code § 29–608.01 — Events causing dissolution and winding up
If the business must keep running while matters are resolved, the court’s power to preserve assets and appoint a receiver or custodian is discussed at court-appointed receiverships.
Which D.C. partnership provisions govern a partner dispute?
Most D.C. partnership disputes are decided by four questions — what the partner is owed, what duties the partner owes back, what ends the relationship, and what dissolves the partnership. Each has its own section of the D.C. Official Code.
| The question | D.C. Code provision | Official heading |
|---|---|---|
| What are a partner’s rights and duties? | § 29–604.01 | “Partner’s rights and duties” |
| What counts as a contribution? | § 29–604.03 | “Form of contribution” |
| What duties does a partner owe? | § 29–604.07 | “General standards of partner’s conduct” |
| What removes a partner? | § 29–606.01 | “Events causing partner’s dissociation” |
| What dissolves the partnership? | § 29–608.01 | “Events causing dissolution and winding up of partnership business” |
Frequently asked questions
Can we sue a partner for something outside the statutory duties?
The fiduciary claim has to fit § 29–604.07, which states the only fiduciary duties a partner owes. Other claims — breach of the partnership agreement, conversion, fraudulent transfer — are separate causes of action with their own elements.
Does leaving the partnership end a partner’s exposure?
Dissociation is a defined event under § 29–606.01 and changes a partner’s position going forward. It does not by itself resolve claims arising from conduct before dissociation.
Is a handshake partnership still a partnership?
Partnership can arise without a written agreement, which is exactly why the statutory default rules matter so much when there is no document to point to.
What if there is no written partnership agreement?
Then the statutory defaults govern — including the duties in § 29–604.07 and the dissolution events in § 29–608.01.
Why are a partner’s duties narrower than a director’s?
Because the statute closes the list. D.C. Code § 29–604.07(a) provides that the only fiduciary duties a partner owes are loyalty and care as set out in that section, and § 29–604.07(c) limits the duty of care to refraining from grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law.
Which court decides whether a partner’s exit was wrongful?
The Superior Court of the District of Columbia, unless the partnership agreement sends the question to arbitration — in which case D.C. Code § 16–4407(a) requires the court to proceed summarily and order arbitration unless it finds there is no enforceable agreement to arbitrate.
How does leaving a partnership become ‘wrongful’?
By breaking the agreement or the term. D.C. Code § 29–606.02(b) makes a dissociation wrongful only where it breaches an express provision of the partnership agreement, or where, in a partnership for a definite term or particular undertaking, the partner withdraws by express will before the term expires or is expelled by judicial determination.
What does a wrongful exit cost the departing partner?
More than their share. D.C. Code § 29–606.02(c) makes a partner who wrongfully dissociates liable to the partnership and to the other partners for the damages caused by the dissociation, and states that this liability is in addition to any other obligation the partner owes.
Sources and legal authorities
- D.C. Code § 29–604.07 — General standards of partner’s conduct
- D.C. Code § 29–604.01 — Partner’s rights and duties
- D.C. Code § 29–604.03 — Form of contribution
- D.C. Code § 29–606.01 — Events causing partner’s dissociation
- D.C. Code § 29–608.01 — Events causing dissolution and winding up
General information about D.C. law, not legal advice. Which rule applies depends on the entity, the agreement and the facts.
Related: Business Ownership & Partner Disputes · Breach of Fiduciary Duty · Partner Diverting Company Funds · Business Dissolution · Business Litigation. Call (301) 901-3109 or use the contact page.