Section 404(b)(3) provides that a partner must refrain from competing with the partnership in the conduct of its business. This rule is derived from Section 393 of the Restatement (Second) of Agency and is an application of the general duty of an agent to act solely on his principal's behalf.

The duty not to compete applies only to the "conduct" of the partnership business; it does not extend to winding up the business, as do the other loyalty rules. Thus, a partner is free to compete immediately upon an event of dissolution under Section 801, unless the partnership agreement otherwise provides. A partner who dissociates without a winding up of the business resulting is also free to compete, because Section 603(b)(2) provides that the duty not to compete terminates upon dissociation. A dissociated partner is not, however, free to use confidential partnership information after dissociation. See Restatement (Second) of Agency § 393 cmt. e (1957). Trade secret law also may apply. See the Uniform Trade Secrets Act.

Under Section 103(b)(3), the partnership agreement may not "eliminate" the duty of loyalty. Section 103(b)(3)(i) expressly empowers the partners, however, to identify specific types or categories of activities that do not violate the duty of loyalty, if not manifestly unreasonable. As under UPA Section 21, the other partners may also consent to a specific act or transaction that otherwise violates one of the rules. For the consent to be effective under Section 103(b)(3)(ii), there must be full disclosure of all material facts regarding the act or transaction and the partner's conflict of interest. See Comment 5 to Section 103.

3. Subsection (c) is new and establishes the duty of care that partners owe to the partnership and to the other partners. There is no statutory duty of care under the UPA, although a common law duty of care is recognized by some courts. See, e.g., Rosenthal v. Rosenthal, 543 A.2d 348, 352 (Me. 1988) (duty of care limited to acting in a manner that does not constitute gross negligence or willful misconduct).

The standard of care imposed by RUPA is that of gross negligence, which is the standard generally recognized by the courts. See, e.g., Rosenthal v. Rosenthal, supra. Section 103(b)(4) provides that the duty of care may not be eliminated entirely by agreement, but the standard may be reasonably reduced. See Comment 6 to Section 103.