Section 606. Power to Bind and Liability
to Limited Partnership Before Dissolution
of Partnership of Person Dissociated as General Partner

(a) After a person is dissociated as a general partner and before the limited partnership is dissolved, converted under [Article] 11, or merged out of existence under [Article 11], the limited partnership is bound by an act of the person only if:

(1) the act would have bound the limited partnership under Section 402 before the dissociation; 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.

(b) If a limited partnership is bound under subsection (a), the person dissociated as a general partner which caused the limited partnership to be bound is liable:

(1) to the limited partnership for any damage caused to the limited partnership arising from the obligation incurred under subsection (a); and

(2) if a general partner or another person dissociated as a general partner is liable for the obligation, to the general partner or other person for any damage caused to the general partner or other person arising from the liability.

Comment

Source – RUPA Section 702.

This Act contains three sections pertaining to the lingering power to bind of a person dissociated as a general partner:

• this section, which applies until the limited partnership dissolves, converts to another form of organization under Article 11, or is merged out of existence under Article 11;

• Section 804(b), which applies after a limited partnership dissolves; and

• Section 1112(b), which applies after a conversion or merger.

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

Subsection (b) – The liability provided by this subsection is not exhaustive. For example, if a person dissociated as a general partner causes a limited partnership to be bound under subsection (a) and, due to a guaranty, some other person is liable on the resulting obligation, that other person may have a claim under other law against the person dissociated as a general partner.