Power of partners and persons dissociated as partners to bind organization after conversion or merger

1. Law
2. Arkansas Code
3. Business and Commercial Law
4. Partnerships
5. Uniform Partnership Act (1996)
6. Conversion and Merger
7. Power of partners and persons dissociated as partners to bind organization after conversion or merger

1. (a) An act of a person that immediately before a conversion or merger became effective was a partner in a converting or constituent partnership binds the converted or surviving organization after the conversion or merger becomes effective if:

   1. (1) Before the conversion or merger became effective the act would have bound the converting or constituent partnership under § 4-46-301; and

   2. (2) At the time the third party enters into the transaction the third party:

      1. (A) Does not have notice of the conversion or merger; and

      2. (B) Reasonably believes that the converted or surviving business is the converting or constituent partnership and that the person is a partner in the converting or constituent partnership.

2. (b) An act of a person that before a conversion or merger became effective was dissociated as a partner from a converting or constituent partnership binds the converted or surviving organization after the conversion or merger becomes effective if:

   1. (1) Before the conversion or merger became effective the act would have bound the converting or constituent partnership under § 4-46-301 if the person had been a partner; and

   2. (2) At the time the third party enters into the transaction, less than two (2) years have passed since the person dissociated as a general partner and the third party:

      1. (A) Does not have notice of the dissociation;

      2. (B) Does not have notice of the conversion or merger; and

      3. (C) Reasonably believes that the converted or surviving organization is the converting or constituent partnership and that the person is a partner in the converting or constituent partnership.

3. (c) If a person with knowledge of the conversion or merger causes a converted or surviving organization to incur an obligation under subsection (a) or subsection (b) of this section the person is liable:

   1. (1) To the converted or surviving organization for any damage caused to the organization arising from the obligation; and

   2. (2) If another person is liable for the obligation, to the other person for any damage caused to the other person arising from the liability.

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