UPA Section 21(1) imposes the duty on partners to account for profits and benefits in all transactions connected with "the formation, conduct, or liquidation of the partnership." Reference to the "formation" of the partnership has been eliminated by RUPA because of concern that the duty of loyalty could be inappropriately extended to the pre-formation period when the parties are really negotiating at arm's length. Compare Herring v. Offutt, 295 A.2d 876 (Ct. App. Md. 1972), with Phoenix Mutual Life Ins. Co. v. Shady Grove Plaza Limited Partnership, 734 F. Supp. 1181 (D. Md. 1990), aff'd, 937 F.2d 603 (4th Cir. 1991). Once a partnership is agreed to, each partner becomes a fiduciary in the "conduct" of the business. Pre-formation negotiations are, of course, subject to the general contract obligation to deal honestly and without fraud.

Upon a partner's dissociation, Section 603(b)(3) limits the application of the duty to account for personal profits to those derived from matters arising or events occurring before the dissociation, unless the partner participates in winding up the partnership's business. Thus, after withdrawal, a partner is free to appropriate to his own benefit any new business opportunity thereafter coming to his attention, even if the partnership continues.

Subsection (b)(2) provides that a partner must refrain from dealing with the partnership as or on behalf of a party having an interest adverse to the partnership. This rule is derived from Sections 389 and 391 of the Restatement (Second) of Agency. Comment c to Section 389 explains that the rule is not based upon the harm caused to the principal, but upon avoiding a conflict of opposing interests in the mind of an agent whose duty is to act for the benefit of his principal.

Upon a partner's dissociation, Section 603(b)(3) limits the application of the duty to refrain from representing interests adverse to the partnership to the same extent as the duty to