RNR Investments Limited Partnership v. Peoples First Community Bank
812 So. 2d 561 (Fla.Dist.Ct.App.2002)
Synopsis: A mortgagee brought a foreclosure action after a limited partnership, as mortgagor, defaulted under terms of note and mortgage.
Facts: The peoples First Community Bank (P) sought foreclosure of a construction project after RNR Investments (D) defaulted on its construction loan.
Issue:
-Is a partnership bound by the unauthorized acts of a partner when the third party neither knew nor
should have known of the restrictions on the partner’s authority?
Holding:Yes. Under the Revised Uniform Partnership Act, a general partner’s authority to act on behalf of the partnership in the ordinary course of partnership business is established, notwithstanding any limitation on the general partner’s actual authority, if a third party did not know or have reason to know that the general partner in fact lacked authority to bind the partnership.
Rules:
-A general partner’s authority to act on behalf of the partnership in the ordinary course of partnership business is established, notwithstanding any limitation on the general partner’s actual authority, if a third party did not know or have reason to know that the general partner in fact lacked authority to bind the partnership.
-Each partner is an agent of the partnership for the purpose of its business.
-An act of a partner, including the execution of an instrument in the partnership name, for apparently carrying on in the ordinary scope of partnership business or business of the kind carried on by the partnership, in the geographic area in which the partnership operates, binds the partnership unless the partner had no authority to act for the partnership in the particular manner and the person with whom the partner was dealing knew or had received notification that the partner lacked authority.
-Thus, even if a general partner's actual authority is restricted by the terms of the partnership agreement, the general partner possesses the apparent authority to bind the partnership in the ordinary course of partnership business or in the business of the kind carried on by the partnership, unless the third party “knew or had received a notification that the partner lacked authority.”
Analysis:
Although a third party has no duty to inspect the partnership agreement to detect any limitations on a general partner’s authority, the partnership may file a statement of partnership authority to restrict a partner’s authority.
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812 So. 2d 561 (Fla.Dist.Ct.App.2002)
Synopsis: A mortgagee brought a foreclosure action after a limited partnership, as mortgagor, defaulted under terms of note and mortgage.
Facts: The peoples First Community Bank (P) sought foreclosure of a construction project after RNR Investments (D) defaulted on its construction loan.
Issue:
-Is a partnership bound by the unauthorized acts of a partner when the third party neither knew nor
should have known of the restrictions on the partner’s authority?
Holding:Yes. Under the Revised Uniform Partnership Act, a general partner’s authority to act on behalf of the partnership in the ordinary course of partnership business is established, notwithstanding any limitation on the general partner’s actual authority, if a third party did not know or have reason to know that the general partner in fact lacked authority to bind the partnership.
Rules:
-A general partner’s authority to act on behalf of the partnership in the ordinary course of partnership business is established, notwithstanding any limitation on the general partner’s actual authority, if a third party did not know or have reason to know that the general partner in fact lacked authority to bind the partnership.
-Each partner is an agent of the partnership for the purpose of its business.
-An act of a partner, including the execution of an instrument in the partnership name, for apparently carrying on in the ordinary scope of partnership business or business of the kind carried on by the partnership, in the geographic area in which the partnership operates, binds the partnership unless the partner had no authority to act for the partnership in the particular manner and the person with whom the partner was dealing knew or had received notification that the partner lacked authority.
-Thus, even if a general partner's actual authority is restricted by the terms of the partnership agreement, the general partner possesses the apparent authority to bind the partnership in the ordinary course of partnership business or in the business of the kind carried on by the partnership, unless the third party “knew or had received a notification that the partner lacked authority.”
Analysis:
Although a third party has no duty to inspect the partnership agreement to detect any limitations on a general partner’s authority, the partnership may file a statement of partnership authority to restrict a partner’s authority.
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