Partnership Agreement Requiring Notice Of Breach Be Given “By The Partnership” Means Notice Must Be Styled As Coming From The Partnership Or On Its Behalf, Not Simply From A Limited Partner

On February 20, 2025, the Appellate Division, First Department, unanimously held that a limited partnership agreement requiring notice of a breach be given “by the Partnership” means the notice must be styled as actually coming from the Partnership or on its behalf, not merely from one of its limited partners. In Karoline Molberg, et al, v. Phoenix Cayman Ltd, et al., Case No. 2023-05964, a for-cause removal provision of the agreement required notice of any breach come “from the Partnership.” Plaintiff, a limited partner, sent a letter purporting to give notice of a breach to the general partner. The lower court denied a motion to dismiss made by the general partner on the basis that “multiple correspondences from limited partners” had noted the breach. The First Department disagreed and reversed. It explained:

Although a limited partner could theoretically send notice on the Partnership’s behalf, that is not what happened here. Rather, the letter was signed by a single limited partner who did not purport to be acting in anything other than her individual capacity. The letter was written in the first-person singular, no other limited partners were copied or referenced, and there was no language in the letter suggesting that it was being sent “derivatively,” “on behalf of,” or even “for the benefit of” the Partnership. As the letter was not “from the Partnership,” as required by the LP Agreement, there was no basis to remove the General Partner for “Cause” thereunder.

The attorneys at Schlam Stone & Dolan frequently counsel clients concerning obligations in limited partnership agreements. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such issues.