8357 - Power of partner to bind partnership to third persons.
§ 8357. Power of partner to bind partnership to third persons. (a) General rule.--After dissolution, a partner can bind the partnership, except as provided in subsection (c): (1) By any act appropriate for winding up partnership affairs or completing transactions unfinished at dissolution. (2) By any transaction which would bind the partnership if dissolution had not taken place if the other party to the transaction: (i) had extended credit to the partnership prior to dissolution and had no knowledge or notice of the dissolution; or (ii) though he had not so extended credit, had nevertheless known of the partnership prior to dissolution, and having no knowledge or notice of dissolution, and the fact of dissolution had not been advertised in a newspaper of general circulation in the place (or in each place, if more than one) at which the partnership business was regularly carried on, and in the legal periodical, if any, designated by rule of court in such place or places for the publication of legal notices. (b) Use of partnership assets.--The liability of a partner under subsection (a)(2) shall be satisfied out of partnership assets alone when the partner had been, prior to dissolution: (1) unknown as a partner to the persons with whom the contract is made; and (2) so far unknown and inactive in partnership affairs that the business reputation of the partnership could not be said to have been in any degree due to his connection with it. (c) Restrictions on postdissolution authority of partner.-- The partnership is in no case bound by any act of a partner after dissolution: (1) where the partnership is dissolved because it is unlawful to carry on the business unless the act is appropriate for winding up partnership affairs; (2) where the partner has become bankrupt; or (3) where the partner has no authority to wind up partnership affairs except by a transaction with one who: (i) had extended credit to the partnership prior to dissolution, and had no knowledge or notice of his want of authority; or (ii) had not extended credit to the partnership prior to dissolution, and, having no knowledge or notice of his want of authority, and the fact of his want of authority has not been advertised in the manner provided for advertising the fact of dissolution in subsection (a)(2)(ii). (d) Partner by estoppel.--Nothing in this section shall affect the liability under section 8328 (relating to partner by estoppel) of any person who, after dissolution, represents himself, or consents to another representing him, as a partner in a partnership engaged in carrying on business. Cross References. Section 8357 is referred to in sections 8355, 8705 of this title.