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Partnerships are built on trust. 

Because partners often have access to each other’s money, information, opportunities, and reputation, the law imposes strict fiduciary duties to prevent abuse of that trust. 

These duties are among the strongest obligations recognised by Australian law.

In South Australia, the rules are primarily found in the Partnership Act 1891 (SA), which allows for both general partnerships (Part 2) and limited partnerships (Part 3). 

For limited partnerships, registration is required (s 51), and they must have at least one general partner (who manages and owes full fiduciary duties) and one limited partner (whose liability is capped at their contribution, provided they don't participate in management — s 49–50). 

If a limited partner gets involved in running the business, a court may deem them a general partner under s 13 of the Act, imposing the same fiduciary obligations.

These duties apply mainly to general partnerships and general partners in limited partnerships. 

Limited partners (who don’t participate in management) generally don’t owe the same fiduciary duties unless they start managing the business — in which case a court may treat them as general partners with full duties.

Equity also overlays these statutory duties, meaning courts can impose additional obligations of good faith and loyalty even where the Act is silent.

At Visual Legal in Adelaide, we regularly advise partners in accounting practices, medical practices, construction joint ventures, and small commercial partnerships, car mechanics, electricians, and even interior decorators on these duties. 

Key Fiduciary Duties Under South Australian Law

1) Duty of Good Faith and Fair Dealing

This is the overarching duty. Partners must act honestly and fairly toward each other and the partnership at all times — from formation, through daily operations, to dissolution. It is both implied by the Partnership Act (s 24) and imposed by equity.

2) Duty of Loyalty

You must put the partnership’s interests ahead of your own.

• Don’t compete with the partnership (s 30 — accountability for private profits).
• Don’t use partnership property for personal gain without full disclosure and consent.
• Avoid conflicts of interest — full disclosure is required before any transaction where you have a personal interest. The Act (s 29) requires partners to account for any private profits made from partnership opportunities or property.

3) Duty of Care and Skill

Partners must manage the business with the care and diligence that a reasonably prudent person would exercise in their own affairs. This includes keeping proper books and records, exercising reasonable oversight of finances, and making informed decisions. The business judgment rule generally protects honest, careful decisions even if they turn out badly.

4) Duty of Full Disclosure (Candour)

Managing partners must disclose all material information that could affect the partnership or the other partners’ decisions — finances, contracts, risks, opportunities, and any personal conflicts. This duty is particularly strict during negotiations to admit new partners, sell the business, or vary the partnership agreement.

Can These Duties Be Limited or Excluded?

Yes — but only to a point. 

Section 24 of the Partnership Act 1891 (SA) allows partners to vary many rights and duties by agreement, as long as it’s reasonable and all partners consent. 

However, core duties like good faith and loyalty can’t be completely eliminated — courts won’t enforce agreements that undermine the fundamental trust of a partnership.

Additionally, courts will not allow partners to completely eliminate the core fiduciary duties of good faith and loyalty. Any attempt to do so is likely to be struck down as contrary to public policy. The agreement must still be reasonable and made with full informed consent.

Consequences of Breach

Breaching fiduciary duties can be very expensive. Remedies available in South Australia include:

• Account of profits (you may have to hand over any personal gain)
• Equitable compensation for losses caused to the partnership
• Constructive trust over assets wrongly acquired
• Injunctions to stop ongoing breaches
• Dissolution of the partnership (s 35 of the Partnership Act)
• Personal liability for damages

Practical Tips for South Australian Partnerships

• Put a well-drafted partnership agreement in place early — it can clarify, modify, and manage many of these duties.
• Keep detailed records of all decisions, disclosures, and consents.
• If you are a general partner, get written consent before pursuing any opportunity that could be seen as a partnership opportunity.
• Limited partners: stay passive if you want to avoid fiduciary duties.
• Professional partnerships (law, accounting, medical) face even stricter duties because of the fiduciary nature of client relationships.

If you are forming a partnership, already in one, or dealing with a dispute involving fiduciary obligations, we can help. 

At Visual Legal we draft clear partnership agreements, advise on compliance with the Partnership Act 1891 (SA) and represent partners in disputes.

Book a free consultation — we’ll meet in our central Adelaide office or via secure teleconference, review your situation, explain your specific duties in plain English, and help you protect yourself and the partnership. 

No pressure, just practical South Australian-focused advice.

Questions about partnerships or fiduciary duties? Feel free to comment or get in touch — we’re here to help.