1.2.2 Economic Interest

Because every partner has an economic interest in the enterprise, the duty of loyalty in a business venture will not be “solely” for the benefit of others. Nevertheless, each partner is called upon to act for the benefit of the enterprise itself not oneself. Justice Cardozo’s pronouncement places the law of partnership, like that of corporations, with the law of trusts, not with contract.[1]

_{[1] The law of contract is the law of the market place. Partnership law is not an isolated example of trust law providing the basis for governance of business organizations where someone is managing property for the benefit of others. In corporate law, the law of trusts, including particularly the duty of loyalty, informs a director’s duty: “We are willing to go further and say that it is possible to conceive of there being only one core duty (of a corporate director), that of loyalty, and that the duty of care is itself simply a component of what is expected of a faithful – that is loyal – fiduciary. That is, we think it uncontroversial that the corporate law duty of loyalty has an affirmative aspect, which demands that a fiduciary make a good faith effort to advance the best interests of the corporation and its stockholders. The Hippocratic maxim to first do no harm is of course relevant to a corporate fiduciary’s role, but, like the role of a physician, the director’s job demands affirmative action – to protect and to better the position of the corporation.” Leo E. Strine, Jr., Lawrence A. Hamermesh, R. Franklin Balotti, and Jeffrey M. Gorris, “Loyalty’s Core Demand: The Defining Role of Good Faith in Corporate Law,” 98 Geo. L.J. 629, 635-6 (2010)[hereafter Strine, et al., “Loyalty’s Core Demand”].}