Explain, with an example, the duty of care owed by a general partner
What will be an ideal response?
A general partner must use reasonable care and skill in transacting partnership business. The duty of care calls for the partners to use the same level of care and skill that a reasonable business manager in the same position would use in the same circumstances. Breach of the duty of care is negligence. A general partner is liable to the partnership for any damages caused by his or her negligence. The partners are not liable for honest errors in judgment.
Example: Tina, Eric, and Brian form a general partnership to sell automobiles. Tina, who is in charge of inventory management, orders large and expensive sport-utility vehicles that consume large amounts of gasoline. A war breaks out in the Middle East that interrupts the supply of oil to the United States. The demand for large SUVs drops substantially, and the partnership cannot sell its inventory. Tina is not liable because the duty of care was not breached.
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