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Fiduciary Duties and Limited Partnership Agreements

41 Pages Posted: 2 May 2003  

Larry E. Ribstein

University of Illinois College of Law (deceased); PERC - Property and Environment Research Center

Date Written: February 25, 2003

Abstract

This article shows that the ULPA 2001's restrictions on contracting regarding fiduciary duties are seriously misguided because they are based on a fundamental misunderstanding of the special nature and functions of the limited partnership form. Even if restrictions on fiduciary duty waivers are appropriate in some contexts, they clearly are inappropriate in limited partnerships, which are designed for relatively sophisticated firms that frequently would want to limit general partners' fiduciary duties. Even if there are valid concerns about protecting limited partners from general partner misconduct, restrictions on waiver should be designed to balance the costs and benefits of waiver. This article shows that courts have managed to do this under UPA and under the more nuanced approach of Delaware law. By contrast, the heavy-handed approach of RUPA and ULPA 2001 precludes such balancing.

Keywords: fiduciary duties, limited partnerships, uniform laws, corporate governance, partnerships

JEL Classification: G3, K2

Suggested Citation

Ribstein, Larry E., Fiduciary Duties and Limited Partnership Agreements (February 25, 2003). U Illinois Law & Economics Research Paper No. LE03-004. Available at SSRN: https://ssrn.com/abstract=401680 or http://dx.doi.org/10.2139/ssrn.401680

Larry Edward Ribstein (Contact Author)

University of Illinois College of Law (deceased)

PERC - Property and Environment Research Center

2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

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