Also known as: willful misconduct · intentional misconduct · wilful misconduct · willfully misconduct
Written by attorneys · grounded in primary & secondary sources — see below
A form of culpable conduct marked by deliberate intent to cause harm or conscious knowledge of wrongdoing. Partnership and LLC statutes treat it as a breach of the duty of care when a partner or member acts with that mental state during company operations or winding up. Agreements may not exonerate or limit liability for such conduct.
Warren Woods, a member of a member-managed LLC, learned that a key asset had appreciated sharply and arranged a secret sale to his own affiliate at a below-market price. He then reported the transaction to the other members as an arms-length deal with an unrelated buyer. The LLC later discovered the self-dealing and sued Woods for breach of the duty of care.
Wayne Walker, the sole general partner of a limited partnership, transferred partnership cash to a personal account to cover gambling debts. He falsified the partnership books to hide the transfers and continued drawing management fees. The limited partners sued Walker for breach of the duty of care.
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Wanda Williams, a partner in a construction partnership, directed crews to skip required safety inspections on a major project to meet a bonus deadline. She knew the shortcuts violated state regulations yet ordered the work to proceed. After a worker was injured, the partnership sued Williams for breach of the duty of care.
Wesley Wong and Walter Washington formed a limited partnership and inserted a clause in the agreement that eliminated all liability for any partner conduct. When Wong later diverted partnership assets for personal use, Washington sued. The court refused to enforce the clause as to the diversion.
Willa Whitman, an officer of a public company, approved press releases that she knew contained false revenue figures. Investors who purchased shares after the releases sued under the securities laws. The court examined whether her statements met the standard for willful or intentional misconduct.
Willowbrook Capital terminated an employee after discovering the employee had deliberately falsified expense reports to obtain reimbursements. The employee sued for wrongful discharge, arguing the termination itself constituted misconduct. The court assessed whether the employee's actions rose to willful or intentional misconduct.
No. Uniform partnership and limited partnership acts prohibit agreements from relieving or exonerating a person from liability for conduct involving bad faith, willful or intentional misconduct, or knowing violation of law.
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The duty of care requires partners and members to refrain from grossly negligent or reckless conduct, willful or intentional misconduct, or knowing violation of law. Willful or intentional misconduct requires proof of deliberate intent or conscious wrongdoing rather than mere deviation from the standard of care.
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No. A partner does not violate a duty solely because the conduct furthers the partner's own interest. Liability arises only when the conduct also meets the definition of willful or intentional misconduct or another prohibited category.
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The partner may be held personally liable for resulting losses because the partnership agreement cannot limit or eliminate that liability. The partnership may also seek damages or an accounting.
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…of Nay that would have revealed the fraudulent scheme. Respondents specifically disclaimed the existence of fraud or intentional misconduct on the part of Ernst & Ernst.[^maj-5] After extensive discovery the District Court granted Ernst & Ernst's motion for summary judgment and dismissed the action. The court rejected Ernst &…