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UTAH STATUTES AND CODES
48-2a-304 - Person erroneously believing himself to be a limited partner.
48-2a-304. Person erroneously believing himself to be a limited partner.
(1) Except as provided in Subsection (2), a person who makes a contribution to abusiness enterprise and erroneously but in good faith believes that he has become a limited partnerin the enterprise is not a general partner in the enterprise and is not bound by its obligations byreason of making the contribution, receiving distributions from the enterprise, or exercising anyrights of a limited partner, if, on ascertaining the mistake, he:
(a) causes an appropriate certificate of limited partnership or a certificate of amendmentto be executed and filed; or
(b) withdraws from future participation in the profits and losses of the enterprise byexecuting and filing with the division a certificate declaring withdrawal under this section;withdrawal under this subsection is without prejudice to the person's right to receive the return ofhis unreturned contribution.
(2) A person who makes a contribution under the circumstance described in Subsection(1) is liable as a general partner to any third party who transacts business with the enterprisebefore the person withdraws and an appropriate certificate is filed to show withdrawal or beforean appropriate certificate is filed to show that he is not a general partner, but in either case only ifthe third party actually believed in good faith that the person was a general partner at the time ofthe transaction and acted in reasonable reliance on such belief and extended credit to thepartnership in reasonable reliance on the credit of such person.
(1) Except as provided in Subsection (2), a person who makes a contribution to abusiness enterprise and erroneously but in good faith believes that he has become a limited partnerin the enterprise is not a general partner in the enterprise and is not bound by its obligations byreason of making the contribution, receiving distributions from the enterprise, or exercising anyrights of a limited partner, if, on ascertaining the mistake, he:
(a) causes an appropriate certificate of limited partnership or a certificate of amendmentto be executed and filed; or
(b) withdraws from future participation in the profits and losses of the enterprise byexecuting and filing with the division a certificate declaring withdrawal under this section;withdrawal under this subsection is without prejudice to the person's right to receive the return ofhis unreturned contribution.
(2) A person who makes a contribution under the circumstance described in Subsection(1) is liable as a general partner to any third party who transacts business with the enterprisebefore the person withdraws and an appropriate certificate is filed to show withdrawal or beforean appropriate certificate is filed to show that he is not a general partner, but in either case only ifthe third party actually believed in good faith that the person was a general partner at the time ofthe transaction and acted in reasonable reliance on such belief and extended credit to thepartnership in reasonable reliance on the credit of such person.
Amended by Chapter 189, 1991 General Session
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