NM Stat § 54-1A-404 (2021)
2021 New Mexico Statutes|Chapter 54 - Partnerships|Article 1A - Uniform Partnerships|Article 4 - Relations of Partners to Each Other and to Partnership.|Section 54-1A-404 - General standards of partner's conduct.

(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). (b) A partner's duty of loyalty to the partnership and the other partners is limited to 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. (c) A partner's duty of care to the partnership and the other partners in the conduct and winding up of the partnership business is limited to refraining from engaging in grossly negligent or reckless conduct, intentional misconduct or a knowing violation of law. (d) A partner shall discharge the duties to the partnership and the other partners under the Uniform Partnership Act (1994) [54-1A-101 to 54-1A-1206 NMSA 1978] or under the partnership agreement and exercise any rights consistently with the obligation of good faith and fair dealing. (e) A partner does not violate a duty or obligation under the Uniform Partnership Act (1994) or under the partnership agreement merely because the partner's conduct furthers the partner's own interest. (f) A partner may lend money to and transact other business with the partnership, and as to each loan or transaction, the rights and obligations of the partner are the same as those of a person who is not a partner, subject to other applicable law. (g) This section applies to a person winding up the partnership business as the personal or legal representative of the last surviving partner as if the person were a partner. History: Laws 1996, ch. 53, § 404. ANNOTATIONSGeneral partner as fiduciary. — The general partner has all the rights and powers and is subject to all the restrictions and liabilities of a partner in a partnership without limited partners and, hence, is accountable to the other partners as a fiduciary. Homestake Mining Co. v. Mid-Continent Exploration Co., 282 F.2d 787 (10th Cir. 1960). Good faith requirement. — It follows from the general requirement of good faith in partnership dealings that a partner is not allowed to gain any advantage over a co-partner by fraud, misrepresentation or concealment, and for any advantage so obtained he must account to the co-partner. Levy v. Disharoon, 1988-NMSC-009, 106 N.M. 699, 749 P.2d 84. Constructive trust for limited partners inequitable. — When a general partner, without notice to its limited partners, utilized assets and facilities of the partnership for a new venture obvious to all, and the limited partners did nothing to claim the right of participation in the venture, because of the mining hazard, and waited until the enterprise was successful and then swarmed in to recover the windfall which their associate made possible by its skill, ingenuity and daring, the imposition of a constructive trust on the profits would not be equity, but injustice, and the doctrine of laches would be enforced. Homestake Mining Co. v. Mid-Continent Exploration Co., 282 F.2d 787 (10th Cir. 1960). Derivative claims against general partners may be brought by limited partners individually. — When the general partner has an ownership interest in another entity that is a party to a proposed partnership transaction, the general partner is required to disclose the interest and the details of the transaction to the limited partners and to obtain the consent of all the limited partners to the transaction before entering into it; a limited partner who was not fully informed or who did not consent to the transaction may bring an individual action for accounting or dissolution or both and, in the context of that action, pursue the claim against the general partner and obtain a judgment for any damages caused by the breach of the general partner's fiduciary duty. Fate v. Owens, 2001-NMCA-040, 130 N.M. 503, 27 P.3d 990, cert. denied, 130 N.M. 484, 27 P.3d 990 (decided under former law). Attorney's fees. — When one partner breaches the fiduciary duty owed another partner, on dissolution of the partnership and accounting of assets it is within the equitable jurisdiction of the court to consider an award of attorney fees to the aggrieved partner. Bassett v. Bassett, 1990-NMSC-070, 110 N.M. 559, 798 P.2d 160. Law reviews. — For note, "The Fiduciary Duties Owed in a New Mexico Closely Held Corporation: Walta v. Gallegos Law Firm, P.C.," see 34 N.M.L. Rev. 181 (2004). Am. Jur. 2d, A.L.R. and C.J.S. references. — 59A Am. Jur. 2d Partnership § 420 et seq. Right of partner or member of joint adventure to share in misappropriated money or property or secret profits, for which partner is required to account, 118 A.L.R. 640. Duty of one who with others as partners or members of a joint adventure in the purchase of property from a third person to share with them the benefit of an existing option or executory contract for the property, 152 A.L.R. 1001. Duty of former partner, acquiring property occupied by partnership business, to renew lease, 4 A.L.R.2d 102. Partner's breach of fiduciary duty to copartner on sale of partnership interest to another partner, 4 A.L.R.4th 1122. Civil liability of one partner to another or to the partnership based on partner's personal purchase of partnership property during existence of partnership, 37 A.L.R.4th 494. 68 C.J.S. Partnership §§ 76, 99.