Answer the following: (a) What is the liability of a limited partner who participates in the management or control of the partnership? (b) What activities can a limited partner perform without being considered to have taken part in control of the business under the RULPA?
(a)
Under the RULPA, a limited partner who participates in the management or control of the business by exercising the powers of a general partner assumes the liability of a general partner to third parties who transact business with the limited partnership reasonably believing, based on the partner's conduct, that the limited partner is a general partner.
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(b) 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. These activities include: being a contractor for, an agent of, or an employee of the limited partnership or of a general partner; being an officer, director, or shareholder of a general partner that is a corporation; consulting with and advising a general partner about the business; acting as surety for the business; bringing a derivative action in the right of the business; requesting or attending a meeting of partners; voting on such things as the dissolution and winding up of the business, the sale of all of the assets of the business, the incurrence of indebtedness by the limited partnership other than in the ordinary course of its business, a change in the nature of the business, the admission or removal of a partner, or an amendment to the partnership agreement or certificate of limited partnership; winding up the limited partnership; or exercising any other right or power permitted to limited partners under the RULPA.
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