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2018 Georgia Code 14-9-304 | Car Wreck Lawyer

Link to State of Georgia Official Statute 2018 Georgia Code Annotated (sourced from legal.resource.org)
O.C.G.A. 14-9-304 Case Law from Google Scholar Amendments to OCGA 14-9-304

TITLE 14 CORPORATIONS, PARTNERSHIPS, AND ASSOCIATIONS

Section 9. Revised Uniform Limited Partnership Act, 14-9-100 through 14-9-1204.

ARTICLE 3 LIMITED PARTNERS

14-9-304. Person erroneously believing himself limited partner.

  1. Except as provided in subsection (b) of this Code section, and, as between the parties to the business enterprise, except as provided in their agreement, a person who makes a contribution to a business enterprise and erroneously believes that he has become a limited partner in the enterprise is not a general partner in the enterprise and is not bound by its obligations by reason of making the contribution, receiving distributions from the enterprise, or exercising any right of a limited partner, if, on ascertaining the mistake, he:
    1. Causes an appropriate certificate of limited partnership or a certificate of amendment to be executed and filed in accordance with Code Sections 14-9-204 through 14-9-206; or
    2. Files or causes to be filed with the Secretary of State in accordance with the procedures contained in subsection (a) of Code Section 14-9-206 a writing entitled "Filing Pursuant to Paragraph (2) of Subsection (a) of Code Section 14-9-304 of the Official Code of Georgia Annotated" that sets forth:
      1. The name of the limited partnership;
      2. The name and mailing address of the person signing the writing;
      3. That the person signing the writing acquired a limited partnership interest in the partnership;
      4. That the person signing the writing has done one or both of the following:
        1. Requested a general partner of the limited partnership to file an accurate certificate of limited partnership required by this chapter;
        2. Instituted a proceeding pursuant to Code Section 14-9-205, which proceeding has not been concluded; and
      5. That the writing is being filed pursuant to paragraph (2) of subsection (a) of this Code section, and that the person signing the writing is claiming that he is not a general partner of the limited partnership named in the writing; or
    3. Files or causes to be filed with the Secretary of State in accordance with the procedures contained in subsection (a) of Code Section 14-9-206 a writing entitled "Filing Pursuant to Paragraph (3) of Subsection (a) of Code Section 14-9-304 of the Official Code of Georgia Annotated" that sets forth the information described in subparagraphs (A) through (C) of paragraph (2) of this subsection and the following additional information:
      1. That the person signing the writing has renounced future equity participation in the enterprise; and
      2. That the writing is being filed pursuant to this paragraph, and that the person signing the writing is claiming status as a limited partner of the enterprise for the period including and prior to the filing of the certificate pursuant to this subsection.
  2. A person who makes a contribution of the kind described in subsection (a) is liable as a general partner, irrespective of whether the enterprise is a general partnership, to any third party who transacts business with the enterprise prior to the occurrence of the earliest of the events referred to in subsection (a) of this Code section:
    1. If the contributor knew either that no certificate of limited partnership had been filed or that the certificate inaccurately referred to the contributor as a general partner; and
    2. If the third party reasonably believed that the contributor was a general partner at the time of the transaction and extended credit to the partnership in reasonable reliance on the credit of the contributor.
  3. More than one party claiming limited partnership status under this Code section may sign the writing to be filed pursuant to subsection (a) of this Code section.

(Code 1981, §14-9-304, enacted by Ga. L. 1988, p. 1016, § 1.)

Code Commission notes.

- Pursuant to Code Section 28-9-5, in 1988, "Code Section 14-9-205" was substituted for "Code Section 14-9-204" in division (a)(2)(D)(ii) and "subsection (a)" was substituted for "subsection (b)" in subsection (c).

COMMENT

Note to Georgia Revised Uniform Limited Partnership Act This section specifies how a person who erroneously believes that he is a limited partner can avoid being held liable as a general partner.

Prior Georgia Law Section 14-9A-43 provides that a limited partner who is mistaken as to his status may avoid general partner liability by renouncing his interest in profits or other income on ascertaining his mistake. This section does not specify how to renunciate or whether the renouncing partner is liable to pre-renunciation creditors.

Comparison With Official RULPA This section is extensively revised from the official version.

Subsections (a)(2) and (3) are derived with some changes from Section 3.04 of the Texas Uniform Limited Partnership Act, Tex. Rev. Civ. Stat. Ann. Art. 6132a-1, Section 3.04 (Supp. 1988). These subsections permit the erroneous limited partner to eliminate the risk of personal liability immediately instead of having to withdraw from the partnership or wait for a general partner to execute a correct certificate or for the conclusion of a judicial execution proceeding. If, prior to the acts in subsection (a)(2) or (3), the erroneous partner knew (in contrast to "knew or should have known" as in RULPA) of the error, there may be liability as set forth in subsection (b).

Subsection (b) is derived with some changes from Section 17-304 of the Delaware Revised Uniform Limited Partnership Act, Del. Code Ann. tit. 6, Section 17-304 (Supp. 1986), as well as the Texas provision cited above. It clarifies that the erroneous partner is liable to creditors who extended credit prior to the cure or withdrawal pursuant to subsection (a) only if the erroneous partner knowingly failed to act earlier and only if the third party not only believed that the erroneous partner was a general partner, but acted in reliance on that belief.

Language has been added to subsection (a) clarifying that rights inter se are governed by the parties' agreement rather than by this section.

Language has also been added to subsection (b) clarifying that the liability imposed under this section is independent of a determination of the existence of a general partnership under Sections 14-8-6 and 14-8-7. This approach serves to penalize those who knowingly permit third parties to be misled into believing that a business enterprise is an unlimited liability association.

Cross-References Determination of existence of general partnership: §§ 14-8-6 and14-8-7. Execution of a certificate by judicial proceeding: § 14-9-205. The rights of a partner who renounces future equity participation by withdrawing: § 14-9-603.

RESEARCH REFERENCES

Am. Jur. 2d.

- 59A Am. Jur. 2d, Partnership, § 865 et seq.

C.J.S.

- 68 C.J.S., Partnership, § 597.

ALR.

- Construction and effect of § 11 of the Uniform Limited Partnership Act providing for modification or limitation of liability upon performance of certain acts by one who erroneously believed he had become a limited partner, 18 A.L.R.2d 1360.

No results found for Georgia Code 14-9-304.