Jane, Kelly, and Lois are partners in an accounting firm, but Jane intends to retire and withdraw from the partnership at the end of the year.Under the RUPA, Jane:
A)has the power to bind the partnership for a partnership obligation incurred within two years after dissociation if the partnership did not dissolve and if at the time of entering into the transaction the other party reasonably believed Jane was then a partner.
B)is liable only for all debts incurred prior to her retirement.
C)is liable to the firm's creditors until the day of her retirement when she will be absolved of all liability.
D)is liable to the firm's creditors for an amount not to exceed her partnership interest on the day of her retirement.
E)is liable to the firm's creditors for an amount not to exceed her initial capital contribution to the partnership.

Question

Quizplus · Accepted Answer

Under RUPA, a dissociating partner like Jane has the power to bind the partnership for a partnership obligation incurred within two years after dissociation if the partnership did not dissolve, and if at the time of entering into the transaction the other party reasonably believed Jane was then a partner. This is known as the "dissociated partner's apparent authority." Additionally, Jane would still be liable for all partnership obligations incurred before her withdrawal, and her liability would not be absolved until all those debts are paid.

Jane, Kelly, and Lois Are Partners in an Accounting Firm