Section 607. Liability to Other Persons
of Person Dissociated as General Partner

(a) A person’s dissociation as a general partner does not of itself discharge the person’s liability as a general partner for an obligation of the limited partnership incurred before dissociation. Except as otherwise provided in subsections (b) and (c), the person is not liable for a limited partnership’s obligation incurred after dissociation.

(b) A person whose dissociation as a general partner resulted in a dissolution and winding up of the limited partnership’s activities is liable to the same extent as a general partner under Section 404 on an obligation incurred by the limited partnership under Section 804.

(c) A person that has dissociated as a general partner but whose

dissociation did not result in a dissolution and winding up of the limited partnership’s activities is liable on a transaction entered into by the limited partnership after the dissociation only if:

(1) a general partner would be liable on the transaction; and

(2) at the time the other party enters into the transaction:

(A) less than two years has passed since the dissociation; and

(B) the other party does not have notice of the dissociation and reasonably believes that the person is a general partner.

(d) By agreement with a creditor of a limited partnership and the limited partnership, a person dissociated as a general partner may be released from liability for an obligation of the limited partnership.

(e) A person dissociated as a general partner is released from liability for an obligation of the limited partnership if the limited partnership’s creditor, with notice of the person’s dissociation as a general partner but without the person’s consent, agrees to a material alteration in the nature or time of payment of the obligation.

Comment

Source – RUPA Section 703.

A person’s dissociation as a general partner does not categorically prevent the person from being liable as a general partner for subsequently incurred obligations of the limited partnership. If the dissociation results in dissolution, subsection (b) applies and the person will be liable as a general partner on any partnership obligation incurred under Section 804. In these circumstances, neither filing a statement of dissociation nor amending the certificate of limited partnership to state that the person has dissociated as a general partner will curtail the person’s lingering exposure to liability.

If the dissociation does not result in dissolution, subsection (c) applies. In this context, filing a statement of dissociation or amending the certificate of limited partnership to state that the person has dissociated as a general partner will curtail the person’s lingering liability. See subsection (c)(2)(B).

If the limited partnership subsequently dissolves as the result of some other occurrence (i.e., not a result of the person’s dissociation as a general partner), subsection (c) continues to apply. In that situation, Section 804 will determine whether, for the purposes of subsection (c), the limited partnership has entered into a transaction after dissolution.

If the limited partnership is a limited liability limited partnership, these liability rules are moot.

Subsection (a) – The phrase “liability as a general partner for an obligation of the limited partnership” refers to liability under Section 404. Following RUPA and the UPA, this Act leaves to other law the question of when a limited partnership obligation is incurred.

Subsection (c)(2)(B) – A person might have notice under Section 103(d)(1) as well as under Section 103(b).