Also known as: knowing violations of law · knowing violation
Written by attorneys · grounded in primary & secondary sources — see below
A category of conduct that breaches the duty of care owed by partners and members of business entities. It consists of actions taken with actual knowledge that they violate applicable law. Partnership and LLC statutes treat such conduct as nonexculpable and nonwaivable by agreement.
Kwame Kofi, a member managing Kinetic Solutions LLC, knowingly submits inflated project metrics to a state agency to secure extra permits. The LLC later faces fines and must refund overpayments. The other members sue Kofi for losses caused by his conduct.
Khadija Khan, the managing general partner of Kodiak Energy LP, deliberately underreports emissions data on regulatory filings to avoid penalties. The limited partnership incurs fines and remediation costs. The limited partners bring suit against Khan for the resulting damages.
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Kevin Kane, a partner in Kestrel Aviation, orders mechanics to bypass required preflight inspections required by FAA regulations to meet a delivery deadline. An aircraft is later grounded and the firm pays substantial penalties. The remaining partners sue Kane to recover the losses.
Kylie Kerr, managing general partner of Knowledge Partners LP, intentionally misclassifies investor funds to evade securities reporting rules. The partnership agreement contains a broad liability waiver. Limited partners sue and the court refuses to enforce the waiver against Kerr's conduct.
Karl Klein, a director of a Delaware corporation, approves transactions he knows violate federal antitrust statutes. Shareholders bring a derivative suit. The court holds that the certificate's exculpatory provision does not shield Klein from liability for the knowing violations.
No. Uniform partnership and limited partnership acts prohibit agreements from relieving or exonerating any person from liability for conduct involving a knowing violation of law. Courts therefore refuse to enforce exculpatory clauses that attempt to cover such conduct.
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No. The standard reaches conduct undertaken with actual knowledge that the act violates law, even if the partner hoped no one would be injured. Deliberately disabling required safety devices or falsifying regulatory filings satisfies the element.
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The conduct can still constitute a knowing violation of law if the guidelines track statutory or regulatory mandates. Courts examine whether the partner acted with knowledge that the chosen course violated binding legal rules, not merely internal policy.
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No. The category includes knowing breaches of civil regulatory requirements such as safety rules, securities reporting obligations, and customs declarations that carry legal penalties.
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…the corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) under § 174 of this title; or (iv) for any transaction from which the director derived an improper personal benefit. No such provision shall eliminate or limit the liability of a…