§ 17-304 — Person erroneously believing himself or herself limited partner

Delaware § 17-304

• Jurisdiction: Delaware
• Title: 6
• Ch. 17: LIMITED PARTNERSHIPS
• Subch.: Limited Partners

Text

(a) Except as provided in subsection (b) of this section, a person who makes a contribution to a partnership and erroneously but in good faith believes that he or she has become a limited partner in the partnership is not a general partner in the partnership and is not bound by its obligations by reason of making the contribution, receiving distributions from the partnership or exercising any rights of a limited partner, if, within a reasonable time after ascertaining the mistake:

(1) In the case of a person who wishes to be a limited partner, he or she causes an appropriate certificate to be executed and filed; or

(2) In the case of a person who wishes to withdraw from the partnership, that person takes such action as may be necessary to withdraw.

(b) A person who makes a contribution under the circumstances described in subsection (a) of this section is liable as a general partner to any third party who transacts business with the partnership prior to the occurrence of either of the events referred to in subsection (a) of this section:

(1) If such person knew or should have known either that no certificate has been filed or that the certificate inaccurately refers to the person as a general partner; and

(2) If the third party actually believed in good faith that such person was a general partner at the time of the transaction, acted in reasonable reliance on such belief and extended credit to the partnership in reasonable reliance on the credit of such person.

Legislative History

6 Del. C. 1953, § 1711; 59 Del. Laws, c. 105, § 1 ; 63 Del. Laws, c. 420, § 1 ; 65 Del. Laws, c. 188, § 1 ; 70 Del. Laws, c. 186, § 1