Section 804(2) attempts to balance the interests of the partners to terminate their mutual agency authority against the interests of outside creditors who have no notice of the partnership's dissolution. Even if the partnership is not bound under Section 804, the faithless partner who purports to act for the partnership after dissolution may be liable individually to an innocent third party under the law of agency. See Section 330 of the Restatement (Second) of Agency (agent liable for misrepresentation of authority), applicable under RUPA as provided in Section 104(a).

RUPA eliminates the special and confusing UPA rules limiting the authority of partners after dissolution. The special protection afforded by UPA Section 35(1)(b)(I) to former creditors and the lesser special protection afforded by UPA Section 35(1)(b)(II) to other parties who knew of the partnership before dissolution are both abolished. RUPA eschews these cumbersome notice provisions in favor of the general apparent authority rules of Section 301, subject to the effect of a filed or recorded statement of dissolution under Section 805. This enhances the protection of innocent third parties and imposes liability on the partnership and the partners who choose their fellow partner-agents and are in the best position to protect others by providing notice of the dissolution.

Also deleted are the special rules for unknown partners in UPA Section 35(2) and for certain causes of dissolution in UPA Section 35(3). Those, too, are inconsistent with RUPA's policy of adhering more closely to the general agency rules of Section 301.

Section 804 should be contrasted with Section 702, which winds down the power of a partner being bought out. The power of a dissociating partner is limited to transactions entered into within two years after the partner's dissociation. Section 804 has no time limitation. However, the apparent authority of partners in both situations is now subject to the filing of a statement of dissociation or dissolution, as the case may be, which operates to cut off such authority after 90 days.