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UNIFORM PARTNERSHIP ACT (UPA)

UNIFORM PARTNERSHIP ACT

(UPA)
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UNIFORM PARTNERSHIP ACT (UPA)

Uniform Partnership Act (UPA)

Uniform Partnership Act (UPA) is important to note down and get aware about for all entities

relating to business, especially partnerships. It actually gives all the instructions regarding

partnership businesses in all states of U.S. This paper contains all the details about UPA.

Overview

The law for the sovereignty of partnerships of businesses by U.S. states is called the Uniform

Partnership Act (UPA). UPA gives all the rules and regulations regarding partnerships of

businesses, accompanied by laws for termination of partnership. It was proposed by NCCUSL

that stands for National Conference of Commissioners on Uniform State Laws. Numerous

amendments of this law were given by NCCUSL from 1914 to 1997. Recent evidences

suggested that it has been revised in 2011 and 2013 (see Table 1).

Table 1

Chronology

Year Revisions

2011 and 2013 Revisions adopted as part of the coordination (Harmonization) Project and

became UPA (1997)

1997 Adjustment to UPA (1996), Section 801,that states events causing dissolution

and it became Uniform Partnership Act (1997)

1996 Adjustments to UPA (1994), Limited Liability Partnership was added and it

became Uniform Partnership Act (1996)

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UNIFORM PARTNERSHIP ACT (UPA)

1994 Alterations to UPA (1993) and it became Uniform Partnership Act (1994)

1993 Alterations to UPA (1992) and it became Uniform Partnership Act (1993)

1992 Proclamation of UPA (1992) via UCL that stands for Uniform Law

Commissioners

1914 Original UPA

This table contains the journey of UPA from 1914 to 2013.

Process of Amendments (1914 to 1994)

The NCCUSL, in 1902 first considered a uniform law of partnership. But later UPA,

personified certain facets to aggregate theory, and was finally accepted by the Conference in

1914. The UPA governs not only general partnerships, but also the limited partnerships

excluding where the limited partnership law is unpredictable.

Proceeding to details, UPA provides the laws regarding partnerships, its formation,

obligations, ownership of assets and all, time duration, working criteria, division of benefits, etc.

This act provides even if any of the partners separates from partnership, remaining partners can

continue the partnership. In short, UPA saved partnerships from termination. Moreover, it

establishes a partnership as a separate legal entity. This law has been adopted in every State of

U.S except Louisiana. Further, it has been gone through the subject of remarkably few changes

over the historical 80 years.

The process of amendments starts, when American Bar Association issued a report on the

needed revisions in UPA, in 1986. Proceeding to this, in 1987, a drafting committee was

appointed to revise UPA. This committee held several meetings, several readings were accepted

during the era and finally, it was completed in 1992, which was universally adopted UPA (1992).
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UNIFORM PARTNERSHIP ACT (UPA)

The process continued with several changes from various groups including several states bar

associations, American Bar Association subcommittee and the Drafting Committee. In result

UPA (1993) and UPA (1994) emerged.

Changes Adopted in UPA (1994). First, it gave sovereignty to the partnership agreement by

setting the default rules for this. Second, it provides stability to partnership and provides many

departures that prevent from dissolution. Third, it gave option and complete procedure of the

buyout (or takeover) of the withdrawing partner's interest rather than dissolution of the

partnership's business. Forth, it includes more extensive definition of obligations. Last, it gave

provision for the open filing of declarations containing basic material about a partnership.

Process of Amendments (1996 to 2013)

In 1995, the committee suggested to add provisions for limited liability partnership. This

adjustment was approved in 1996, and faced four major issues. First, the act required votes to

approve the provision and the required vote is that which considers contribution duties which

were most affected by the amendments. Majority consent was needed for such purpose. Second,

partners visibly intend to split their personal obligation to make contributions to the partnership

when partnership assets are insufficient to cover partnership indemnification necessities to a

partner, when they vote to become an LLP. This obligation is imposed by a partner’s creditor

(Section 807(f)) as well as partner itself (Sections 401 and 405). Third, the Act does not amend a

normal partnership rules regarding a partner’s misconduct and partner’s right to indemnification

from the partnership. Consequently, key outcome of the provision is the right to split personal

liability in case of loss. Forth, The Act states that a partnership’s prestige as an LLP remains
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UNIFORM PARTNERSHIP ACT (UPA)

effective until, it is canceled by a vote of the partners, or by the Secretary of State under new

Section 1003(c).

After resolving these issues, Uniform Partnership Act (1997) came into existence. The UPA

(1997) was followed by amendments in 2011 and 2013 by Uniform Law Conference due to

Harmonization project, and underwent four major types of changes. (ULC, 2018)

Changes Adopted in UPA (2011 and 2013)

The first and more important was substantive changes. These changes include simplifying the

Section 103; revising provisions relating to the partnership contract, Sections 105–107;

consolidating productive notice provisions, Section 103(d); providing rules on illegal

circulations, Sections 406–407; apprising numerous filing provisions affecting to LLP, Sections

108–118; adding the comprehensive provisions of the Model Entity Transactions Act, Article 11;

and making clear that the act’s compulsion of good faith and fair dealing is the common law

obligation of contract law, Section 409(d). Other changes were in language, etc., (see Table 2).

Table 2 (ACT, 2018).

Contents of Uniform Partnership Act 1997 (Last Revised 2013)

1 Every trade, profession and occupation is included in business.

2 Every partner’s benefits or property provided to partnership is known as his contribution.

3 A person who is comparable under state, federal or foreign law governing insolvency is

known as debtor in bankruptcy.

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UNIFORM PARTNERSHIP ACT (UPA)

4 Any partnership that is formed under the law other than this state is known as foreign

partnership and foreign partnership whose partners have limited liability is known as

foreign LLP, while the Local partnership whose partners have limited liability is known as

LLP.

5 Any political body (state, political division, etc.) is known as jurisdiction.

6 Jurisdiction whose law administrates the internal affairs of an entity is jurisdiction of

formation.

7 Connotation of two or more partners by sharing assets, profit, loss, etc. is called

partnership and the agreement concerning the elements in section 105 (a) is called

partnership agreement.

8 All property, whether, personal, real, tangible, mixed, intangible, or any right or interest

there is known as property.

9 The right to receive distribution of shares, profits, etc., in partnership in predefined

fraction, whether person remains partner or not is called transferable interest. (ACT,

2018).

This table contains the major amendments of 2013 in UPA.

Summary

This act was approved in 1914 that deals with all the rules and regulations, laws regarding

partnership business. Initially, it was accepted in two states of U.S., but with the passage of time

more states stared accepted it, as it comforts their legal needs, and recently it is an approved law
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UNIFORM PARTNERSHIP ACT (UPA)

in all states of U.S. This journey of success took over almost 80 years that is from 1914 to 2013,

which is the year in which UPA is recently amended.

References

http://uniformlaws.org/Act.aspx?title=Partnership%20Act%20%281997%29%20%28Last%20A

mended%202013%29

www.uniformlaws.org

Donald J. Weidner & John W. Larson, the Revised Uniform Partnership Act: The Reporters'

Overview, 49 Bus. Law. 1 (1993).

Bibliography
ACT. (2018). Partnership Act (1997) (Last Amended 2013). Retrieved from Uniform Law Comission:
http://uniformlaws.org/Act.aspx?title=Partnership%20Act%20%281997%29%20%28Last%20Am
ended%202013%29

ULC. (2018). Diversity of Thought, Uniformity of Law. Retrieved from Uniform Law Comission:
www.uniformlaws.org