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Chapter 35
Limited Partnerships and Special Partnerships
VI. Answers to Critical Legal Thinking Cases
35.1 Liability of Limited Partners
No, the limited partners are not individually liable to Day. A limited partnership is a domestic limited
partnership in the state in which it is organized, and a foreign limited partnership in all other states. Under
Kentucky law, a foreign limited partnership is required to register with the state before conducting
business in that state. If a foreign limited partnership fails to do so, the only loss of right is that it cannot
35.2 Liability of Partners
Molander can only recover against the assets of the limited partnership and its corporate general and
limited partners. He cannot recover against Calvin Raugust personally. Under limited partnership law, a
limited partnership is liable on its own contracts; in addition, the general partner is individually liable for
the debts and obligations of a limited partnership. Limited partners may be held liable for the obligations
of the limited partnership if the limited partnership has been defectively formed. Otherwise, limited
Molander can only recover against the shareholders of these entities. That is, Molander cannot recover
against Calvin Raugust, the shareholder of the corporate general partner, individually. If the assets of
these defendant corporate entities are insufficient to pay Molander’s claim, he cannot recover against
Raugust’s personal assets. In reaching this conclusion, the court stated: “Few people are aware of the
court’s $447,011 judgment against Calvin Raugust. Note: If Molander wanted to make Calvin Raugust
personally liable for the architectural services, he should have required Raugust to sign a personal
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VII. Answer to Ethics Case
35.3 Ethics Case
court held that Cosmopolitan had not substantially complied with the legal requirements for the
organization of a limited partnership at the time it had entered into the contract with Dwinell’s. This was
because the certificate of limited partnership had not been filed with the state until several months after
the contract was signed. Obviously, the purpose of the filing requirement is to acquaint third persons,
general partners on the debt due Dwinell’s. It could be concluded that the limited partners acted
unethically in denying liability on the contract because the law was quite clear that there was no limited
