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Partnership Law In Florida: What To Know About Self-Dealing


Self-dealing is exactly what it sounds like: It occurs when an individual takes advantage of their trusted position for the benefit of their personal interests, and not the party/entity to which they owe legal responsibilities. In Florida, self-dealing could be a violation of the state’s partnership laws. In this blog post, our West Palm Beach partnership disputes attorneys provide a guide to self-dealing and partnership disputes in Florida.

Self-Dealing: Examples 

Self-dealing can come in a wide range of different forms. Though, all cases of self-dealing within a partnership involve an important common element: One business partner improperly used their position to further their own personal interests. Some specific examples of partnership self-dealing include:

  • Modifying the structure of the partnership for self benefit;
  • Approving an unreasonable personal loan, using the partnership’s assets;
  • Entering the partnership into an unfavorable contract with another company, owned by that business partner; and
  • Making decisions that result in money/assets being drained out of the partnership. 

Self-Dealing is a Breach of Fiduciary Duty  

The issue of self-dealing typically arises when one party owes a fiduciary duty to another party. It is not only an issue in partnerships. Self-dealing also occurs in corporations and among trustees. The highest standard of care under American law, a fiduciary responsibility is simply a legal obligation to act in the best interest of another party. Self-dealing can amount to a breach of fiduciary duty. An individual who uses their position to obtain a personal benefit at the expense of the party to which they owe a fiduciary duty can be held liable for self-dealing.

Know the Law: General Standards of Partner’s Conduct

In Florida, members of partnership are technically not fiduciaries to each other. However, they do have certain fiduciary responsibilities. Specifically, under Florida State Statutes § 620.8404, “the only fiduciary duties a partner owes to the partnership and the other partners are the duty of loyalty and the duty of care.” Among other things, a partner’s duty of loyalty includes:

  • An obligation to protect the assets of the partnership;
  • An obligation to avoid the misappropriation of a partnership opportunity; and
  • An obligation to avoid competing with the partnership in its areas of business.

To summarize, an individual business partner has every to participate in outside business activities that further their own personal financial interests. However, they are not entitled to directly compete with the partnership nor are they entitled to “deal” with the partnership in a manner that benefits their own interests at the expense of the company.

Call Our South Florida Partnership Lawyers Today

At Pike & Lustig, LLP, our Florida partnership law attorneys are diligent, solutions-focused representatives for business owners and entrepreneurs. We believe that every business partner deserves personalized guidance and support from a dedicated lawyer. If you have any questions about self-dealing and Florida’s partnership laws, we are available to help. Give us a call now for a fully confidential case evaluation. We handle partnership disputes in West Palm, Miami, and beyond.

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