Judicial Scrutiny of Fiduciary Duties in Delaware Limited Partnerships and Limited Liability Companies

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Delaware Journal of Corporate Law, Vol. 32, No. 1, pp. 1-32, 2007

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Myron T. Steele
delaware; journal; corporate; law; steele; limited partnership; limited liability companies; agreement; common law; contract
paper description
Delaware courts have tremendous experience in applying fiduciary duty principles when issues involving corporate governance arise. When the business entity involved is a limited partnership or a limited liability company, however, should the courts draw analogies from common law corporate fiduciary duty principles? In this article, Chief Justice Steele argues that parties forming limited partnerships and limited liability companies should be free to adopt or reject some or all of the fiduciary duties recognized at common law and that courts should look to the parties' agreement and apply a contractual analysis rather than analogizing to traditional notions of corporate governance. Chief Justice Steele also suggests that the application of a contractual analysis would comport with the statutory mandate expressed in the 2004 amendment to Delaware's Limited Partnership Act and would best serve the intent of the parties.