The Limited Partner and Control

Question 1

Limited Partner Liability (ULPA)

Answer 1

ULPA: A limited partner shall not become liable as a general partner unless, in addition to the exercise of his rights and powers as a limited partner, he takes part in the control of the business.

Question 2

Limited Partner Liability (RULPA)

Answer 2

To be liable, there needs to be actual involvement in the control of the business by the limited partner and a reasonable belief based on the limited partner’s conduct, that the limited partner is the general partner.

A limited partner may still be liable to persons who transact business with the LP with knowledge of his actual control.

Question 3

Determining If a Limited Partner Controls

Answer 3

A limited partner does not participate in the control of the business solely by acting as surety or guarantor for any liabilities for the LP. The limited partner just cannot induce the loan.

However, any limited partner can step in at a time of crisis to save the limited partnership without being a general partner.

Question 4

Limited Partner Ownership Interest

Answer 4

A limited partner owns an interest in the income stream derived from the property, but he does not own an interest in specific partnership property.

Question 5

Transfer of a Limited Partner’s Interest

Answer 5

(1) Is permissible
(2) does not cause the partner’s dissociation or dissolution and winding up and
(3) does not entitle the transferee to participate in the management or conduct of the limited partnership’s activities, require access to information, or to inspect or copy the required information of the partnership’s records.