(a) An act of a person that immediately before a conversion or merger became effective was a partner in a converting or constituent partnership binds the converted or surviving organization after the conversion or merger becomes effective, if:

Terms Used In Alabama Code 10A-8A-9.12

  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
  • person: includes a corporation as well as a natural person. See Alabama Code 1-1-1
(1) before the conversion or merger became effective, the act would have bound the converting or constituent partnership under Section 10A-8A-3.01; and
(2) at the time the third party enters into the transaction, the third party:

(A) does not have notice of the conversion or merger; and
(B) reasonably believes that the converted or surviving organization is the converting or constituent partnership and that the person is a partner in the converting or constituent partnership.
(b) An act of a person that before a conversion or merger became effective was dissociated as a partner from a converting or constituent partnership binds the converted or surviving organization after the conversion or merger becomes effective, if:

(1) before the conversion or merger became effective, the act would have bound the converting or constituent partnership under Section 10A-8A-3.01 if the person had been a partner; and
(2) at the time the third party enters into the transaction, the third party:

(A) does not have notice of the dissociation;
(B) does not have notice of the conversion or merger; and
(C) reasonably believes that the converted or surviving organization is the converting or constituent partnership and that the person is a partner in the converting or constituent partnership.
(c) If a person having knowledge of the conversion or merger causes a converted or surviving organization to incur an obligation under subsection (a) or (b), the person is liable:

(1) to the converted or surviving organization for any damage caused to the organization arising from the obligation; and
(2) if another person is liable for the obligation, to that other person for any damage caused to that other person arising from the liability.