N.Y. Partnership Law 121-303 – Liability to third parties
§ 121-303. Liability to third parties. (a) Except as provided in subdivision (d) of this section, a limited partner is not liable for the contractual obligations and other liabilities of a limited partnership unless he is also a general partner or, in addition to the exercise of his rights and powers as a limited partner, he participates in the control of the business. However, if the limited partner does participate in the control of the business, he is liable only to persons who transact business with the limited partnership reasonably believing, based upon the limited partner's conduct, that the limited partner is a general partner.
Terms Used In N.Y. Partnership Law 121-303
- Amendment: A proposal to alter the text of a pending bill or other measure by striking out some of it, by inserting new language, or both. Before an amendment becomes part of the measure, thelegislature must agree to it.
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Certificate of limited partnership: means the certificate referred to in section 121-201 of this article, and the certificate as amended. See N.Y. Partnership Law 121-101
- Executor: A male person named in a will to carry out the decedent
- Fiduciary: A trustee, executor, or administrator.
- General partner: means a person who has been admitted to a limited partnership as a general partner in accordance with the partnership agreement and, if required by the law of the jurisdiction under which the limited partnership or foreign limited partnership, as the case may be, is organized, is so named in the certificate of limited partnership or similar instrument. See N.Y. Partnership Law 121-101
- Indemnification: In general, a collateral contract or assurance under which one person agrees to secure another person against either anticipated financial losses or potential adverse legal consequences. Source: FDIC
- Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Limited partner: means a person who has been admitted to a limited partnership as a limited partner in accordance with the partnership agreement or as otherwise provided by the law of the jurisdiction under which the limited partnership or foreign limited partnership, as the case may be, is organized. See N.Y. Partnership Law 121-101
- merger: shall mean a procedure in which two or more limited partnerships merge into a single limited partnership which shall be one of the constituent limited partnerships and "consolidation" shall mean a procedure in which two or more limited partnerships consolidate into a single limited partnership which shall be a new limited partnership to be formed pursuant to the consolidation. See N.Y. Partnership Law 121-1101
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Partner: means a limited or general partner. See N.Y. Partnership Law 121-101
- Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
- Partnership agreement: means any written agreement of the partners as to the affairs of a limited partnership and the conduct of its business. See N.Y. Partnership Law 121-101
- Person: means a natural person, partnership, limited partnership (domestic or foreign), limited liability company (domestic or foreign), trust, estate, custodian, nominee, association, corporation or any other individual or entity in its own or any representative capacity. See N.Y. Partnership Law 121-101
- Prosecute: To charge someone with a crime. A prosecutor tries a criminal case on behalf of the government.
- State: means a state, territory, or possession of the United States, the District of Columbia, or the Commonwealth of Puerto Rico. See N.Y. Partnership Law 121-101
- Trustee: A person or institution holding and administering property in trust.
(b) A limited partner does not participate in the control of the business within the meaning of subdivision (a) of this section by virtue of doing one or more of the following:
(1) being a contractor for or transacting business with, including being a contractor for, or an agent or employee of the limited partnership or of a general partner or an officer, director or shareholder of a corporate general partner, or a member, manager or agent of a limited liability company that is a general partner of the limited partnership, or a partner of a partnership that is a general partner of the limited partnership, or a trustee, administrator, executor, custodian or other fiduciary or beneficiary of an estate or trust which is a general partner, or a trustee, officer, advisor, shareholder or beneficiary of a business trust which is a general partner, or acting in such capacity;
(2) consulting with and advising or rendering professional services to a general partner with respect to any matter, including the business of the limited partnership;
(3) acting as surety or endorser for the limited partnership, or guaranteeing or providing security for or lending money to or assuming one or more debts of the limited partnership;
(4) approving or disapproving an amendment to the partnership agreement, or calling, requesting, or participating in any meeting of general and limited partners or limited partners;
(5) taking any action to bring, prosecute, or terminate any derivative action brought in the right of the limited partnership;
(6) proposing, approving, disapproving, or voting on any one or more of the following matters:
(A) the amendment of the partnership agreement or certificate of limited partnership;
(B) the dissolution and winding up of the limited partnership;
(C) the sale, exchange, lease, mortgage, assignment, pledge, or other transfer of, or granting of a security interest in, any asset or assets of the limited partnership;
(D) the merger or consolidation of the limited partnership or election to continue the business of the limited partnership;
(E) the incurrence, renewal, refinancing or payment or other discharge of indebtedness by the limited partnership;
(F) a change in the nature of the business;
(G) the admission or removal of a partner;
(H) a transaction or other matter involving an actual or potential conflict of interest;
(I) in respect of a limited partnership which is registered as an investment company under an act of Congress entitled Investment Company Act of 1940, any matter required by said Investment Company Act of 1940, or the rules and regulations promulgated thereunder, to be approved by holders of beneficial interests in an investment company;
(J) such other matters as are required for submission to limited partners by federal or state securities laws or rules or regulations thereunder, or rules of self-regulatory bodies governing the trading of limited partnership interests;
(K) the indemnification of any partner or other person; or
(L) such other matters as are stated in the partnership agreement to be subject to approval, disapproval or vote by the limited partners;
(7) consulting with or advising, or being an officer, director, shareholder, partner, member, manager, agent or employee of, or being a fiduciary for, any person in which the limited partnership has an interest;
(8) winding up the limited partnership pursuant to section 121-803 of this article; or
(9) exercising any right or power permitted to limited partners under this article and not specifically enumerated in this subdivision.
(c) The enumeration in subdivision (b) of this section does not mean that the possession or exercise of any other powers by a limited partner constitutes participation by him in the control of the business of the limited partnership.
(d) A limited partner who expressly consents in writing to his name being used in the name of the limited partnership is liable to creditors who extend credit to the limited partnership without actual knowledge that the limited partner is not a general partner.
(e) A limited partner does not participate in the control of the business within the meaning of subdivision (a) of this section regardless of the nature, extent, scope, number or frequency of the limited partner's possessing or, regardless of whether or not the limited partner has the rights or powers, exercising or attempting to exercise one or more of the rights or powers or having or, regardless of whether or not the limited partner has the rights or powers, acting or attempting to act in one or more of the capacities which are permitted under this section.