Exam Rules - Partnerships Flashcards
Is a general partner liable for the acts of another partner
Yes, a general partner is personally liable to third parties for the obligations of the limited partnership to the same extent that a general partner is liable for the obligations fo the partnership.
When does a partner’s act bind the partnership
A partner’s act that was authorized by the partnership binds the partnership.
When does a partner act with authority
A partner can act with either implied or express authority. Express authority can arise from the partnership agreement itself, an authorization of the partners, or a statement of authority filed with the state. Implied authority is based on a partner’s reasonable belief that an action is necessary to carry out his express authority.
When does apparent authority apply
The partner’s unauthorized act must be performed in the ordinary course of apparently carrying on either the partnership business or business of a kind carried on by the partnership. The third party with whom the partner was dealing cannot hold the partnership liable when that party knew or received notice that the partner lacked authority.
When is a partnership liable for an act made without actual or apparent authority?
When the partnership ratifies the obligation. Ratification occurs when a principal affirms a prior act that was done or purported to be done on the principal’s behalf.
Is a limited partner liable for the obligations of a limited partnership
Generaly no, unless they also serve as a general partner or participates in the control of the business. If they participate in the control of the business, they are only liable to persons who transact business with the limited partnership reasonably believing based on the limited partner’s conduct, that the LP is a GP.
