Section 402. General Partner Agent
of Limited Partnership

(a) Each general partner is an agent of the limited partnership for the purposes of its activities. An act of a general partner, including the signing of a record in the partnership’s name, for apparently carrying on in the ordinary course the limited partnership’s activities or activities of the kind carried on by the limited partnership binds the limited partnership, unless the general partner did not have authority to act for the limited partnership in the particular matter and the person with which the general partner was dealing knew, had received a notification, or had notice under Section 103(d) that the general partner lacked authority.

(b) An act of a general partner which is not apparently for carrying on in the ordinary course the limited partnership’s activities or activities of the kind carried on by the limited partnership binds the limited partnership only if the act was actually authorized by all the other partners.

Comment

Source – RUPA Section 301. For the meaning of “authority” in subsection (a) and “authorized” in subsection (b), see RUPA Section 301, Comment 3 (stating that “Subsection (2) [of RUPA Section 301] makes it clear that the partnership is bound by a partner's actual authority, even if the partner has no apparent authority”; emphasis added).

The fact that a person is not listed in the certificate of limited partnership as a general partner is not notice that the person is not a partner and is not notice that the person lacks authority to act for the limited partnership. See Comment to Section 103(c) and Comment to Section 401.

Section 103(f) defines receipt of notification. Section 103(d) lists various public filings, each of which provides notice 90 days after its effective date.

Example: For the past ten years, X has been a general partner of XYZ Limited Partnership and has regularly conducted the limited partnership’s business with Third Party. However, 100 days ago the limited partnership expelled X as a general partner and the next day delivered for filing an amendment to XYZ’s certificate of limited partnership which stated that X was no longer a general partner. On that same day, the filing officer filed the amendment.

Today X approaches Third Party, purports still be to a general partner of XYZ and purports to enter into a transaction with Third Party on XYZ’s behalf. Third Party is unaware that X has been expelled and has no reason to doubt that X’s bona fides. Nonetheless, XYZ is not liable on the transaction. Under Section 103(d), Third Party has notice that X is dissociated and perforce has notice that X is not a general partner authorized to bind XYZ.