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If the deed has a condition that partners must not keep secret profits, which principle does it strengthen?

Answer and explanation

Correct answer: Good faith and transparency

Partners owe one another a duty of utmost good faith. They must disclose relevant information and must not secretly retain benefits or profits obtained through the firm’s business or position. A clause prohibiting secret profits makes this duty explicit and encourages honest reporting, openness, and accountability among the partners.

Therefore, option A, good faith and transparency, is correct. Cash sales, inventory valuation, and bank interest are separate accounting or transaction matters and do not describe the ethical principle involved here. The condition protects the common interest of the firm by ensuring that a partner does not privately benefit from an opportunity connected with the partnership.

Related tags

Secret ProfitGood FaithTransparency

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