Purpose　-　The　purpose　of　this　paper　is　to　empirically　investigate　the　effects　of　competence　and　goodwill　trust　on　knowledge　creation　and　the　moderating　effects　of　legal　inadequacy　on　those　relationships.　Design/methodology/approach　-　A　questionnaire　survey　was　used　to　collect　data　from　196　research　and　development　alliances　in　China.　Hierarchical　moderated　regression　was　used　to　test　the　research　hypotheses.　Findings　-　The　authors　find　that　competence　trust　has　a　positive　and　linear　relationship　with　knowledge　creation　while　goodwill　trust　has　an　inverted　U-shaped　relationship　with　it.　The　results　also　reveal　that　the　inverted　U-shaped　relationship　between　goodwill　trust　and　knowledge　creation　is　stronger　when　legal　inadequacy　is　high,　while　the　impact　of　competence　trust　on　knowledge　creation　is　not　influenced　by　legal　inadequacy.　Originality/value　-　The　findings　provide　insights　into　the　distinctive　effects　of　competence　and　goodwill　trust　on　knowledge　creation　in　partnerships,　deepening　current　understandings　of　the　bright　and　dark　sides　of　inter-firm　trust.　This　study　also　clarifies　the　influences　of　legal　inadequacy　on　the　effectiveness　of　competence　and　goodwill　trust,　which　enhances　existing　knowledge　about　the　impact　of　legal　systems　on　the　relationships　between　inter-firm　trust　and　knowledge　management.