48-2a-303 - Liability to third parties.
48-2a-303. Liability to third parties.
(1) Except as provided in Subsection (4), a limited partner is not liable for the obligationsof a limited partnership unless he is also a general partner or, in addition to the exercise of hisrights and powers as a limited partner, he participates in the control of the business. However, ifthe limited partner participates in the control of the business, he is liable only to persons whotransact business with the limited partnership reasonably believing, based upon the limitedpartner's conduct, that the limited partner is a general partner.
(2) A limited partner does not participate in the control of the business within themeaning of Subsection (1) solely by doing one or more of the following:
(a) being a contractor for or an agent or employee of the limited partnership or of ageneral partner, or being an officer, director, or shareholder of a general partner that is acorporation;
(b) consulting with and advising a general partner with respect to the business of thelimited partnership;
(c) acting as surety for the limited partnership or guaranteeing or assuming one or morespecific obligations of the limited partnership;
(d) taking any action required or permitted by law to bring or pursue a derivative actionin the right of the limited partnership;
(e) requesting or attending a meeting of partners;
(f) proposing, approving, or disapproving, by voting or otherwise, one or more of thefollowing matters:
(i) the dissolution and winding up of the limited partnership;
(ii) the sale, exchange, lease, mortgage, pledge, or other transfer of all or substantially allof the assets of the limited partnership;
(iii) the incurrence of indebtedness by the limited partnership other than in the ordinarycourse of its business;
(iv) a change in the nature of the business;
(v) the admission or removal of a general partner;
(vi) the admission or removal of a limited partner;
(vii) a transaction involving an actual or potential conflict of interest between a generalpartner and the limited partnership or the limited partners;
(viii) an amendment to the partnership agreement or certificate of limited partnership; or
(ix) matters related to the business of the limited partnership not otherwise enumerated inthis subsection, which the partnership agreement states in writing may be subject to the approvalor disapproval of limited partners;
(g) winding up the limited partnership pursuant to Section 48-2a-803; or
(h) exercising any right or power permitted limited partners under this chapter and notspecifically enumerated in this subsection.
(3) The enumeration in Subsection (2) does not mean that the possession or exercise ofany other powers by a limited partner constitutes participation by him in the business of thelimited partnership.
(4) A limited partner who knowingly permits his name to be used in the name of thelimited partnership, except under circumstances permitted by Subsection 48-2a-102(1)(b) isliable to creditors who extend credit to the limited partnership without actual knowledge that thelimited partner is not a general partner.
Amended by Chapter 189, 1991 General Session