Did carpenter breach that duty in this case

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James Carpenter contracted with Austin Estates, LP, to buy property in Texas. Carpenter asked Sandra McBeth to invest in the deal. He admitted that a dispute had arisen with the city of Austin over water for the property, but he assured her that it would not be a significant obstacle. McBeth agreed to invest $800,000 to hold open the option to buy the property. She became a limited partner in Stone Lake Ranch, LP. Carpenter acted as the firm's general partner. Despite his assurances to McBeth, the purchase was delayed due to the water dispute. Unable to complete the purchase in a timely manner, Carpenter paid the $800,000 to Austin Estates without notifying McBeth. Later, Carpenter and others (excluding McBeth) bought the property and sold it at a profit. McBeth filed a suit in a Texas state court against Carpenter.

1. What is the nature of the fiduciary duty that a general partner owes a limited partner?

2. Did Carpenter breach that duty in this case? Explain in detail, including the advantage this form of business deal has for both partners.

3. Did either partner act inappropriately? Why or why not?

Reference no: EM131179028

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