§ 10-304. Person erroneously believing himself limited partner

   (a) Acts to avoid liability. -- Except as provided in subsection (b) of this section, a person who makes a contribution to a partnership and erroneously but in good faith believes that he has become a limited partner in the partnership is not a general partner in the partnership and is not bound by its obligations by reason of making the contribution, receiving distributions from the partnership, or exercising any rights of a limited partner, if, within 30 days after he knew or should have known of the mistake:

   (1) In the case of a person who wishes to be a limited partner, the person causes an appropriate certificate to be executed and filed; or

   (2) In the case of a person who wishes to withdraw as a partner from the partnership, the partner takes the necessary action to withdraw.

(b) Liability imposed. -- A person who makes a contribution under the circumstances described in subsection (a) of this section is liable as a general partner to any third party who transacts business with the partnership prior to the occurrence of either of the events referred to in subsection (a) of this section:

   (1) If that person knew or reasonably should have known either that no certificate has been filed or that the certificate inaccurately refers to him as a general partner; and

   (2) If the third party reasonably relied upon the fact that the person was a general partner at the time of the transaction.

HISTORY: 1981, ch. 801, § 2; 1988, ch. 550; 2007, ch. 5, § 7.