§ 61-2-303 — Person believed to be limited partner

Tennessee § 61-2-303

• Jurisdiction: Tennessee
• Title: 61

Text

(a) Except as provided in subsection (b), a person who makes a contribution to a partnership and erroneously but in good faith believes that he 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 causes, if applicable, a certificate of amendment withdrawing him as a general partner to be executed and filed with the office of the secretary of state and has his interest as a limited partner properly recorded, in the limited partnership's records as required by law and the partnership agreement; (2) In the case of a person who wishes to withdraw from the partnership, he takes such action as may be necessary to withdraw. (b) A person who makes a contribution under the circumstances described in subsection (a) 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): (1) If such person knew or should have known either that no certificate has been filed or that the certificate inaccurately refers to him 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

Acts 1988, ch. 922, § 1; 1989, ch. 270, § 38.