Going the distance: how far do good faith duties really stretch in UK partnerships?

What are good faith duties?

Partners in a general partnership are legally obliged to act in the utmost good faith toward one another and the partnership. This fiduciary duty requires honesty, transparency, full disclosure of information and prioritising the firm’s interests over personal gain.

They exist both through common law and under the Partnerships Act 1890; however, they don’t automatically arise between partners of a Limited Liability Partnership (LLP).

Claims often arise for breaches of good faith duties when relationships have broken down between partners. But if things get to that stage, it will be much more difficult to retain trust and confidence, which is why provisions of these duties should be considered at the very start of forming partnerships.

Common law

Under common law, the duty is a fiduciary one owed directly between partners. While the duties are robust, they can be shaped by agreement. They are based on loyalty and mutual confidence, the core of which are:

• That a partner will not put themselves in a position where their personal interests conflict with the duties owed to their partners
• No partner will make a profit from their position.

They exist, not only within partnerships already in existence, but also between potential partners negotiating entry into a partnership and for an outgoing partner, until the partnership is wound up.

Partnership Act 1890

The Act doesn’t explicitly impose a duty of good faith, but it does create three duties which effectively require this:

• Partners must render true accounts and full information of all matters affecting the partnership (section 28)
• Partners must account to the partnership for any profit/benefit obtained without consent (section 29)
• Partners must not compete with the partnership without consent and must account for any profits if they do (section 30).

Section 24 also sets out default rights and duties in the absence of agreement.

Applying good faith to practice

The question is, what does “acting with the utmost good faith” actually look like? Arguably, it’s simply what you would expect to see: full transparency around all conflict, consulting partners before pursuing matters which may affect the partnership, disclosing/sharing/discussing information in a timely manner with the other partners and being generally honest about the actions/dealings/communications undertaken.

It’s important to check agreements for any provisions which may try to explicitly include or exclude partners working in good faith, as this may impact the relations between partners and how they each conduct themselves within a partnership and, importantly, how they are expected to act.

Application within partnerships

Limited Liability Partnerships

As previously mentioned, good faith duties don’t automatically apply to LLPs; although partners’ duties may still arise from the agreement itself, or their role within the partnership (for instance, if they act as an agent for the partnership).

An LLP is established as its own legal entity, meaning general partnership laws don’t apply. This was made clear in F&C Alternative Investments (Holdings) Limited v Barthelemy and another (No.2) [2011] when it was held that partners of a LLP owed no statutory fiduciary duties to each other, nor could such duties be derived from existing partnership law.

However, unlike other partnerships where the fiduciary duties are to the other partner(s), partners in an LLP owe a fiduciary duty to the LLP itself, as a separate entity.

Duties only arise if expressly included in the agreement. It’s important to be aware of these restrictions and ensure that, should an LLP want these duties to exist, they need to be expressly provided for within the agreement.

In the alternative, it would also appear that any duty of good faith between partners can also be excluded, if provided for explicitly, which may be used to provide further protection against individual liability in those instances.

General partnerships

In contrast, many partnerships have attempted to limit the scope, or exclude altogether, the good faith duties within their agreements; historically, courts have held that the duties cannot be excluded in their entirety and any exclusion clauses are construed narrowly by courts. However, it may be possible to limit them, as long as the core duty of honesty is preserved

The courts have made clear that this fiduciary duty between partners is the foundation of their agreements, as Bacon VC stated in Helmore v Smith [1887]:

“If fiduciary relation means anything I cannot conceive a stronger case of fiduciary relation than that which exists between partners. Their mutual confidence is the life blood of the concern. It is because they trust one another that they are partners in the first instance; it is because they continue to trust each other that the business goes on.”

They evidently remain as strict as ever following the recent decision in Rukhadze and others v Recovery Partners GP Ltd [2025] in which the court considered the ‘no-profit’ rule and upheld that it is key to the fiduciary’s duty of loyalty and reinforced these essential duties between partners.

Conclusion

Ultimately, understanding how far good faith duties extend is essential to managing risk and maintaining trust with any partnership. For businesses operating in partnerships, clarity on these duties is not just a legal issue, but a key factor in protecting relationships and values.