Uniform Partnership Act (UPA)
What Is the Uniform Partnership Act?
The Uniform Partnership Act (UPA) offers governance for business partnerships in 44 U.S. states and districts. For example, the UPA provides regulations concerning the dissolution of a partnership when a partner leaves.
Established in 1914 by the National Conference of Commissioners on Uniform State Laws (NCCUSL), the UPA has been revised over the years. The newer version is often called the Revised Uniform Partnership Act (RUPA).
The role of the NCCUSL -also known as the Uniform Law Commission (ULC)- is to promote uniformity of state laws in the United States. The ULC is a nonprofit organization of 300-plus law commissioners representing each state as well as the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. ULC commissioners must be bar members, so many of them are law professors, judges, or practicing attorneys.
Although the ULC researches, proposes, and drafts uniform state laws, the individual state governments are responsible for deciding which laws they will enact.
What Are the Main Components of the Uniform Parentship Act?
The goal of the UPA is to give guidance to general partnerships and limited liability partnerships (LLPs). Having a partnership agreement, or a written contract between two or more parties in a business relationship, helps define the entity's functions and the duties of the individuals who own it.
The UPA does not apply to limited partnerships (LPs). Larger companies tend to have this guidance already in place.
The act, which currently contains 12 articles, governs the creation of a partnership and its fiduciary duties and defines partnership assets and liabilities. Here are some of the key components of the UPA.
- The act allows for a partnership to agree to continue within 90 days after the departure of a single partner. This guidance prevents the immediate dissolution of a partnership.
- It contains provisions and definitions for the scope and function of the partnership agreement.
- It includes the rules of transfer of partnership property, statements, and the liability of the partners in relation to legal obligations and debts.
- The act provides an overview of the partnership's management and distribution rights and stresses loyalty, care, and good faith in all dealings.
- It lists events that could cause a partner to dissociate and the rules regarding the purchase of a dissociated partner's interests.
- The act includes details on the dissolution of a partnership.
- It provides guidance for mergers, conversions, exchanges, and domestic and foreign transactions.
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The UPA vs. the RUPA
Since its creation in 1914, the UPA has undergone several revisions. After changes made in 1994, it became known as the Revised Uniform Partnership Act or RUPA. More modifications happened in 1996 and 1997.
The RUPA is more detailed than the UPA, especially regarding how the partnership agreement may revise the default rules that are part of the partnership's statute. The RUPA also clearly defines a partnership as an entity rather than a group of individuals.
One of the most significant changes occurred in 1997. That year, the act was amended to include guidance that prevents an immediate dissolution of a partnership when a dissociation occurs.
Many partnerships use a partnership agreement template to help them organize the rules and regulations of their entities.
Helpful Resources:
Uniform Law Commission - Partnership Act
Investopedia - Uniform Partnership Act (UPA)
Cornell Law - Revised Uniform Partnership Act of 1997 (RUPA)
What Is the Uniform Partnership Act?
The Uniform Partnership Act (UPA) offers governance for business partnerships in 44 U.S. states and districts. For example, the UPA provides regulations concerning the dissolution of a partnership when a partner leaves.
Established in 1914 by the National Conference of Commissioners on Uniform State Laws (NCCUSL), the UPA has been revised over the years. The newer version is often called the Revised Uniform Partnership Act (RUPA).
The role of the NCCUSL -also known as the Uniform Law Commission (ULC)- is to promote uniformity of state laws in the United States. The ULC is a nonprofit organization of 300-plus law commissioners representing each state as well as the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. ULC commissioners must be bar members, so many of them are law professors, judges, or practicing attorneys.
Although the ULC researches, proposes, and drafts uniform state laws, the individual state governments are responsible for deciding which laws they will enact.
What Are the Main Components of the Uniform Parentship Act?
The goal of the UPA is to give guidance to general partnerships and limited liability partnerships (LLPs). Having a partnership agreement, or a written contract between two or more parties in a business relationship, helps define the entity's functions and the duties of the individuals who own it.
The UPA does not apply to limited partnerships (LPs). Larger companies tend to have this guidance already in place.
The act, which currently contains 12 articles, governs the creation of a partnership and its fiduciary duties and defines partnership assets and liabilities. Here are some of the key components of the UPA.
- The act allows for a partnership to agree to continue within 90 days after the departure of a single partner. This guidance prevents the immediate dissolution of a partnership.
- It contains provisions and definitions for the scope and function of the partnership agreement.
- It includes the rules of transfer of partnership property, statements, and the liability of the partners in relation to legal obligations and debts.
- The act provides an overview of the partnership's management and distribution rights and stresses loyalty, care, and good faith in all dealings.
- It lists events that could cause a partner to dissociate and the rules regarding the purchase of a dissociated partner's interests.
- The act includes details on the dissolution of a partnership.
- It provides guidance for mergers, conversions, exchanges, and domestic and foreign transactions.
Free LLC Operating Agreement Template Now
The UPA vs. the RUPA
Since its creation in 1914, the UPA has undergone several revisions. After changes made in 1994, it became known as the Revised Uniform Partnership Act or RUPA. More modifications happened in 1996 and 1997.
The RUPA is more detailed than the UPA, especially regarding how the partnership agreement may revise the default rules that are part of the partnership's statute. The RUPA also clearly defines a partnership as an entity rather than a group of individuals.
One of the most significant changes occurred in 1997. That year, the act was amended to include guidance that prevents an immediate dissolution of a partnership when a dissociation occurs.
Many partnerships use a partnership agreement template to help them organize the rules and regulations of their entities.
Helpful Resources:
Uniform Law Commission - Partnership Act
Investopedia - Uniform Partnership Act (UPA)
Cornell Law - Revised Uniform Partnership Act of 1997 (RUPA)