What is the effect on liability of a limited partner who participates in the management of the partnership? What activities may a limited partner perform without affecting liability?
A limited partner who participates in the control of the business is liable only to those persons who transact business with the limited partnership reasonably believing, based on the limited partner's conduct, that the limited partner is a general partner. The RULPA lists certain activities that constitute a "safe harbor" and that a limited partner may carry on without being deemed to have taken part in control of the business. They include: (a) being a contractor for, or an agent or employee of, the limited partnership or a general partner; (b) consulting with and advising a general partner; (c) acting as surety for the limited partnership; (d) approving or disapproving an amendment to the partnership agreement; and (e) voting on various fundamental changes in the limited partnership.
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