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If a partner starts a competing business without the deed's permission, which principle is violated?

Answer and explanation

Correct answer: Duty of loyalty and good faith towards the firm

Partners owe a duty of loyalty (a fiduciary duty) to the firm; carrying on a competing business without permission places the partner’s interests in conflict with the firm and therefore breaches that duty. Answer B (confidentiality) could also be implicated if firm secrets were misused, but the primary breach is loyalty. Options C (profit-sharing) and D (due care/skill) describe different obligations and do not directly cover unauthorised competition. Exam tip: remember “no competition without consent = breach of loyalty/fiduciary duty.”

Related tags

PartnershipFiduciary DutyPartnership DeedBreach Of TrustAccountancyPartnership Accounts Basic ConceptsClass 12 Mcq

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