Legal Question in Business Law in Idaho

Use of Business Card (by business owner) breach of fiduciary duty if used for pe

Three partners in LLC (A,B,C). A owns 38%, B&C own 31% each. All partners have business cards and all have used for personal reasons now and again. Partners report use to bookkeeper and instruct to record transaction as a draw against their capital account in the company. Are the partners in fiduciary breach to one another? Can partners A&B claim that C is in fiduciary breach if A&B are engaged in the same activity? Is there a timeline for reporting this activity to the other partners if nothing is stipulated in the LLC agreement? To what extent can other partners claim material adverse effect to the company if the charges are shown as being taken from their respective capital account?


Asked on 9/10/03, 2:13 am

1 Answer from Attorneys
Gass Timothy Gass Law Office

Re: Use of Business Card (by business owner) breach of fiduciary duty if used fo

if the draws are authorized in the partnership agreement (0r the LLC papers) then the partners can presumptively take draws against the earnings, depending upon the financial viability of the company. They shouldn't be taking anything out of any other account kept by the LLC.

2. If the one partner is doing what the others are doing, then they can hardly complain about it. the draws should be signed by the LLC and be made upon LLC checks authorized by the LLC. They should be issued for such items as salary, recompense of officers, etc.

3. is there a partnership agreement setting forth the obligations of the partners to each other. In a true partnership, each partner is a fiduciary to the others. In the LLC their duties to each other and to the LLC should be set forth in the operating documents.

4. without reading these documents I cannot further answer your questions

I do give a half hour free consultation in my office. Please call me at 208-345-3817 if you want me to review the LLC documents

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Answered on 9/10/03, 11:33 am


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