Question

Cindy was a limited partner in the jkl limited partnership. because of her expertise in this type of business, cindy was asked to take care of day-to- day operations of the partnership. jkl had two primary creditors, smith supply co. and jones discount. smith knew that cindy was a limited partner, but jones thought that cindy was a general partner. due to unforeseen economic conditions, jkl went bankrupt owing both smith and jones large amounts of money. both smith and jones sue cindy as a general partner. to what extent is cindy liable to them?

Answer 1

Even though Cindy participated in the day-to-day operations of the partnership, she is liable as a general partner only to Jones. This is because Jones knew that Cindy was a general partner. She cannot be liable to Smith as Smith knew she was a limited partner