Uniform Partnership Act (UPA)

Uniform Partnership Act (UPA)

Key takeaways
* The Uniform Partnership Act (UPA) is a model statute that governs general partnerships and limited liability partnerships (LLPs) in many U.S. jurisdictions.
* It was first drafted in 1914 by the National Conference of Commissioners on Uniform State Laws (now the Uniform Law Commission) and the most recent official full revision was completed in 1997, with clarifying amendments added later.
* UPA addresses formation, partner duties, partnership property and liabilities, dissociation and dissolution, and rules for conversions and mergers.
* A notable rule allows the remaining partners to agree to continue the partnership within 90 days after a partner’s dissociation, preventing automatic dissolution.
* Approximately 44 states and several U.S. territories have adopted versions of the UPA.

What the UPA is and why it matters
The UPA provides a standardized legal framework for the operation of partnerships where partners have not adopted a comprehensive private agreement. It fills gaps by specifying default rules for partnership formation, management, partner responsibilities, treatment of partnership property, liability for debts, and procedures for dissociation, buyouts, dissolution, and winding up.

Scope and applicability
* Applies primarily to general partnerships and LLPs; it does not govern limited partnerships (LPs).
* A “person” under the Act includes individuals, partnerships, limited liability companies, corporations, and other associations.
* States may adopt the UPA with modifications; adoption is voluntary and implemented through state statutes.

Core provisions (concise overview)
Formation and status
* Sets default rules for creating a partnership when two or more persons carry on as co-owners of a business for profit.
* Partnerships may be formed for a fixed duration or at-will; duration is determined by the partnership agreement if present.

Partner rights and fiduciary duties
* Defines partner management and distribution rights, and establishes fiduciary duties of loyalty, care, and good-faith dealing between partners.
* Basic standards of good-faith conduct cannot be eliminated by agreement in ways that would violate mandatory protections.

Partnership property and liabilities
* Distinguishes partnership property from individual partner property.
* Creditors’ remedies against a partner’s interest can be limited to the partner’s share rather than partnership assets in some circumstances—creditors may reach a partner’s transferable interest but generally not partnership property itself.

Dissociation, continuation, and dissolution
* Lists events that cause a partner to dissociate and provides procedures for buyouts of a dissociated partner’s interest.
* Crucially, when a partner dissociates, the remaining partners holding a majority interest can agree within 90 days to continue the partnership, avoiding automatic dissolution.
* Sets rules for formal dissolution and winding up of partnership affairs.

LLPs, mergers, and conversions
* Provides for limited liability protection for partners in LLPs (subject to state adoption and specific rules).
* Includes standards and procedures for mergers, conversions, and domestication transactions between partnership forms and other entity types.

Structure of the Act (high level)
The Act is organized into articles covering definitions and scope; formation and status; property transfer and partner liability; partner duties and management; dissociation and buyouts; dissolution and winding up; LLP provisions; mergers and conversions; foreign LLPs; and miscellaneous provisions.

History and revisions
* Originally drafted in 1914; revised versions emerged in the 1990s.
* The 1997 version is treated as the official current text, with later clarifying amendments added.
* The term “RUPA” (Revised Uniform Partnership Act) is sometimes used to refer to earlier revisions, but the 1997 UPA text is the commonly cited version in practice.

Role of the Uniform Law Commission
The Uniform Law Commission (ULC), formerly the NCCUSL, researches and drafts model statutes like the UPA to promote consistency among state laws. It does not enact laws itself; states independently decide whether and how to adopt the model text.

Common questions
What’s the difference between UPA and RUPA?
* “RUPA” refers to earlier revisions of the model partnership law. The 1997 UPA is the current official model, and some references to RUPA can create confusion. Check the specific statute adopted in your state for exact language.

Can partners waive UPA duties in an agreement?
* Parties can vary many contractual terms, but mandatory duties—such as basic standards of good faith—cannot be completely eliminated in ways that undermine the Act’s protective framework.

Are partnerships automatically dissolved if a partner leaves?
* Not necessarily. The UPA allows the remaining partners a 90-day window to elect to continue the partnership, preventing automatic dissolution in many cases.

Practical implications for businesses
* The UPA supplies sensible default rules for small or informal partnerships that lack a detailed written agreement.
* Parties forming a partnership should adopt a written agreement to customize management, profit sharing, transfer rights, and exit procedures beyond the UPA defaults.
* Lawyers and business owners should consult the specific partnership statute enacted in their state because states may modify the model provisions.

Conclusion
The Uniform Partnership Act provides a uniform set of default rules to govern partnership formation, partner duties, property and liability, dissociation, and dissolution. While widely adopted, its provisions serve as a baseline—parties are encouraged to draft explicit partnership agreements and to review the version of the Act enacted in their jurisdiction.