Also known as:transferees of such initial transferee · subsequent transferee
Written by attorneys · grounded in primary & secondary sources — see below
A subsequent recipient of partnership property from the initial transferee. The partnership cannot recover the property from this party unless it proves the party knew or had been notified that the signer of the initial instrument lacked authority to bind the partnership.
Sources & Authorities
How it applies
Common Examples
2
Partnership Asset Resale to Value Purchaser
Tonya Takahashi, a partner in Bridge Inns, executes a deed transferring the partnership hotel to Trailblazer Airlines solely for a personal management contract. Trailblazer Airlines later conveys the hotel to Tanner Thompson for fair market value after standard due diligence that reveals no title defects and no actual knowledge of the unauthorized initial transfer. Because Tanner Thompson is a transferee of such initial transferee who gave value without notice of the authority defect, the partnership cannot recover the hotel from him.
Dock Facility Chain of Transfers
Kiara, a partner in River Coastal, transfers the dock facility to Point Harbor to satisfy her personal guarantee. Point Harbor then conveys the dock for substantial value to Summit Coastal after a standard title search that discloses no restrictions and with no actual knowledge of Kiara's lack of authority. Summit Coastal, as a transferee of such initial transferee, is protected because the partnership cannot prove it would have recovered from Point Harbor under the governing standards.
Put it into practice
Test Yourself
10
Practice Questions5
· 5 primary sources
Select any source to read its text and confirm it supports the definition.
Statutes
Uniform Acts
Restatements
Study Supplements
Common questions
Frequently Asked
3
How does the statute distinguish an initial transferee from a transferee of such initial transferee?+
An initial transferee receives the property directly from the debtor or partnership in the avoided transfer. A transferee of such initial transferee receives the property or its value from that first recipient. The statute limits recovery against the latter when the party took for value, in good faith, and without knowledge of voidability.
Supporting sources
What must a partnership prove to recover from a subsequent transferee who gave value?+
The partnership must prove that the initial instrument did not bind the partnership and that the subsequent transferee knew or had been notified that the signer lacked authority. Without that showing, recovery is barred even if the initial transfer was unauthorized.
Supporting sources
Does notice to an earlier transferee automatically bind a later transferee?+
No. The statute evaluates each transferee independently. Knowledge or notice held by an initial transferee is not imputed to a subsequent transferee who gave value without its own knowledge or notification of the authority defect.
Supporting sources
Business Associations RelationshipsFormation, management, and control of general partnerships · Formation, management, and control of general partnershipsNEXTGENFoundational