§ 121-303 — Liability to third parties

New York § 121-303

• Jurisdiction: New York
• Law PTR: Partnership
• Art. 8-A: Revised Limited Partnership Act

Text

§ 121-303. Liability to third parties. (a) Except as provided in\nsubdivision (d) of this section, a limited partner is not liable for the\ncontractual obligations and other liabilities of a limited partnership\nunless he is also a general partner or, in addition to the exercise of\nhis rights and powers as a limited partner, he participates in the\ncontrol of the business. However, if the limited partner does\nparticipate in the control of the business, he is liable only to persons\nwho transact business with the limited partnership reasonably believing,\nbased upon the limited partner's conduct, that the limited partner is a\ngeneral partner.\n (b) A limited partner does not participate in the control of the\nbusiness within the meaning of subdivision (a) of this section by virtue\nof doing one or more of the following:\n (1) being a contractor for or transacting business with, including\nbeing a contractor for, or an agent or employee of the limited\npartnership or of a general partner or an officer, director or\nshareholder of a corporate general partner, or a member, manager or\nagent of a limited liability company that is a general partner of the\nlimited partnership, or a partner of a partnership that is a general\npartner of the limited partnership, or a trustee, administrator,\nexecutor, custodian or other fiduciary or beneficiary of an estate or\ntrust which is a general partner, or a trustee, officer, advisor,\nshareholder or beneficiary of a business trust which is a general\npartner, or acting in such capacity;\n (2) consulting with and advising or rendering professional services to\na general partner with respect to any matter, including the business of\nthe limited partnership;\n (3) acting as surety or endorser for the limited partnership, or\nguaranteeing or providing security for or lending money to or assuming\none or more debts of the limited partnership;\n (4) approving or disapproving an amendment to the partnership\nagreement, or calling, requesting, or participating in any meeting of\ngeneral and limited partners or limited partners;\n (5) taking any action to bring, prosecute, or terminate any derivative\naction brought in the right of the limited partnership;\n (6) proposing, approving, disapproving, or voting on any one or more\nof the following matters:\n (A) the amendment of the partnership agreement or certificate of\nlimited partnership;\n (B) the dissolution and winding up of the limited partnership;\n (C) the sale, exchange, lease, mortgage, assignment, pledge, or other\ntransfer of, or granting of a security interest in, any asset or assets\nof the limited partnership;\n (D) the merger or consolidation of the limited partnership or election\nto continue the business of the limited partnership;\n (E) the incurrence, renewal, refinancing or payment or other discharge\nof indebtedness by the limited partnership;\n (F) a change in the nature of the business;\n (G) the admission or removal of a partner;\n (H) a transaction or other matter involving an actual or potential\nconflict of interest;\n (I) in respect of a limited partnership which is registered as an\ninvestment company under an act of Congress entitled Investment Company\nAct of 1940, any matter required by said Investment Company Act of 1940,\nor the rules and regulations promulgated thereunder, to be approved by\nholders of beneficial interests in an investment company;\n (J) such other matters as are required for submission to limited\npartners by federal or state securities laws or rules or regulations\nthereunder, or rules of self-regulatory bodies governing the trading of\nlimited partnership interests;\n (K) the indemnification of any partner or other person; or\n (L) such other matters as are stated in the partnership agreement to\nbe subject to approval, disapproval or vote by the limited partners;\n (7) consulting with or advising, or being an officer, director,\nshareholder, partner, member, manager, agent or employee of, or being a\nfiduciary for, any person in which the limited partnership has an\ninterest;\n (8) winding up the limited partnership pursuant to section 121-803 of\nthis article; or\n (9) exercising any right or power permitted to limited partners under\nthis article and not specifically enumerated in this subdivision.\n (c) The enumeration in subdivision (b) of this section does not mean\nthat the possession or exercise of any other powers by a limited partner\nconstitutes participation by him in the control of the business of the\nlimited partnership.\n (d) A limited partner who expressly consents in writing to his name\nbeing used in the name of the limited partnership is liable to creditors\nwho extend credit to the limited partnership without actual knowledge\nthat the limited partner is not a general partner.\n (e) A limited partner does not participate in the control of the\nbusiness within the meaning of subdivision (a) of this section\nregardless of the nature, extent, scope, number or frequency of the\nlimited partner's possessing or, regardless of whether or not the\nlimited partner has the rights or powers, exercising or attempting to\nexercise one or more of the rights or powers or having or, regardless of\nwhether or not the limited partner has the rights or powers, acting or\nattempting to act in one or more of the capacities which are permitted\nunder this section.\n