N.Y. Partnership Law § 43

Partnership Law § 43: a partner must account for any private benefit

Partnership Law § 43 makes every partner account as a fiduciary, holding as trustee any profit taken without the other partners' consent.

Official text N.Y. Partnership Law § 43 — New York

§ 43. Partner accountable as a fiduciary. 1. Every partner must account to the partnership for any benefit, and hold as trustee for it any profits derived by him without the consent of the other partners from any transaction connected with the formation, conduct, or liquidation of the partnership or from any use by him of its property.

  • 2. This section applies also to the representatives of a deceased partner engaged in the liquidation of the affairs of the partnership as the personal representatives of the last surviving partner.

Text as published in the 2026 snapshot of the code.

Source: Vaquill Open US Law, compiled from official state publishers (huggingface.co), reproduced under license CC BY 4.0.

Read this provision at the official source →

What it actually says

Two sentences, and the first is one of the most consequential in the whole statute. Every partner must account to the partnership for any benefit, and hold as trustee for it any profits derived by him without the consent of the other partners from any transaction connected with the formation, conduct or liquidation of the partnership, or from any use by him of its property.

Read the elements. "Any benefit" - not just money taken from the account, but any advantage obtained. "Without the consent of the other partners" - consent is the entire defense, which is why disclosure at the time is worth so much more than justification afterwards. "Hold as trustee" - the remedy is proprietary rather than a mere debt, so the profit itself belongs to the partnership. And the reach extends to the formation and liquidation of the partnership as well as its conduct, so opportunities taken while setting the business up, and assets taken while winding it down, are both caught.

What the section notably does not require is loss. A partner who diverts an opportunity must account for the profit even if the partnership can prove no damage of its own. Subdivision 2 extends the section to the representatives of a deceased partner engaged in liquidating the partnership's affairs as personal representatives of the last surviving partner.

When it applies

  • A partner takes money out of the business account for personal use.
  • A partner diverts a customer or an opportunity to a company they own separately.
  • A partner takes a commission or rebate from a supplier without telling the others.
  • A partner uses partnership premises, equipment or client list for a side venture.
  • A departing partner solicits the firm's clients while still a partner.

What this section does not say

  • It does not require the partnership to have lost anything. The obligation is to account for the benefit received.
  • It does not prohibit the transaction. What it prohibits is keeping the profit without the other partners' consent.
  • It does not set a time limit or a remedy procedure. The mechanism for compelling an accounting is § 44.
  • It does not decide whether a partnership exists in the first place - that is § 11.
  • It says nothing about liability to outsiders, which is § 26.

Worked examples

Invented situations, written to show how the wording bites. They are not real cases, not judgments and not precedent, and nothing here predicts what would happen in yours.

Illustrative example

One partner is found to have been putting the firm's best jobs through a company he owns separately and keeping the margin, having mentioned it to nobody.

How the wording applies

Every partner must account to the partnership for any benefit and hold as trustee any profits derived without the consent of the other partners from a transaction connected with the conduct of the partnership. Consent is the whole of the defense, which is why disclosure at the time is worth far more than justification afterwards. What the section does not require is loss - the profit is accounted for even if the firm can show no damage of its own.

How the parties settled it

The margin on the diverted jobs is paid into the partnership account, the side company stops trading, and the partners adopt a written rule that outside work is declared before it is taken on.

Illustrative example

A partner who handles buying has for years taken a personal rebate from a supplier. She says it harmed nobody, because the prices the firm paid were competitive anyway.

How the wording applies

The obligation is to account for any benefit, not only for money drawn from the partnership's account, and it bites whether or not the partnership lost anything by it. So the fact it turns on is consent: whether the other partners knew of the rebate and agreed that she could keep it.

How the parties settled it

She pays over the rebates for the last three years, keeps the buying role, and all the partners sign a short conflicts policy under which supplier benefits are disclosed and credited to the firm.

Illustrative example

While two people were still setting up a business together, one quietly took the lease on the premises they had been viewing in his own name. The partnership now pays him rent for it.

How the wording applies

The section reaches transactions connected with the formation of the partnership as well as its conduct, so acting before the doors opened does not put the lease outside it. It turns on whether the other partner consented to the lease being taken personally, not on whether the rent charged is at market.

How the parties settled it

The lease is assigned to the partnership at cost, the rent already paid is credited against his capital account, and the partnership meets the transfer costs.

Related sections

N.Y. Partnership Law § 44 Partnership Law § 44: a partner's right to a formal account N.Y. Partnership Law § 40 Equal profits, no salary: N.Y. Partnership Law § 40 N.Y. Partnership Law § 11 Profit is prima facie evidence: N.Y. Partnership Law § 11 N.Y. Partnership Law § 73 Retiring partner share value: N.Y. Partnership Law § 73

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We copy this text from the official publisher and re-check it against that source on every page load, but we cannot guarantee it is complete, current or free of error, and we accept no liability for any reliance on it. An amendment can take effect before a consolidation catches up. The publisher's own copy is linked below; where the two differ, it is the official one that counts.

This page reproduces the text of N.Y. Partnership Law § 43 in force at the date shown and explains it in general terms. It is not legal advice and takes no account of the circumstances of your case, which can change the answer completely. For a live dispute, for limitation periods, and before taking any step in court, consult a qualified lawyer in New York.

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