Uniform Partnership Act

(UPA)

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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 the partnership. It was proposed by
NCCUSL that stands for ‘’National Conference of Commissioners on Uniform State Laws’’.
Numerous amendments to this law were given by NCCUSL from 1914 to 1997. Recent evidence
suggested that it has been revised in 2011 and 2013 as a measure of the Harmonization project.
This paper contains all the details about UPA.

Chronology

Year Revisions

2013 Revisions adopted as part of the coordination (Harmonization)

Project and became UPA (1997)

2011 Revisions embraced as part of the Coordination Project

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)

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

(1994)

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

(1993)

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 1992 Proclamation of UPA (1992) via UCL that stands for Uniform Law
Commissioners
1914 Original UPA

The process of Amendments (1914 to 1994)

The NCCUSL, in 1902 first considered a uniform law of partnership. Initial breezes had
progressed along the "entity" theory of companies especially with the companies that are
governed by the partnership Act. However, with the passage of time the ‘aggregate’ theory
encompassed draft in deducing common-law of ‘aggregate’ theory. The resultant UPA
personified certain true aspects and facets of each theory. As a result of all these efforts and
personification of certain aspects, these philosophies finally accepted by the Conference in the
year 1914.
What the role of UPA governs is not just limited to in-depth consideration of general
partnerships, but its role is extended to limited partnerships as well. However, the companies
where the limited partnership law is unpredictable are excluded from the domains of the UPA.
Proceeding to details, UPA provides the laws regarding partnerships, its formation, obligations,
ownership of assets and all, time duration, working criteria, a division of benefits, etc. This act
provides even if any of the partners separate from the 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 historic 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 San Francisco, in 1992, which was
universally adopted UPA (1992).

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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)

The UPA (1994) stated following significant amendments. 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 dissolution. Third, it is welcomed by
the withdrawing partners because the withdrawing partners can also get complete guidelines
for buyout or takeover for securing their interest rather than dissolving their business in term of
the partnership. Forth, it includes a more extensive definition of obligations. Last but not the
least, the open filing of declarations can also be subjected to some provisions that contain basic
material about a partnership. (ULC, 2018)

The process of Amendments (1996 to 2013)

In 1995, the committee suggested adding provisions for limited liability partnership. This
adjustment was approved in 1996, and over forty stated adopted this provision. This provision
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, it has been observed that the partners show their intention to split their obligations in
contribution toward the partnership. It usually happens when they confront with the
insufficient assets to meet the indemnification. So, 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 normal partnership rules regarding a partner’s misconduct.
Meanwhile, the Act fails to offer required amendments regarding rights of partners to
indemnification from the partnership.

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Consequently, it is inevitable that partners usually split their liabilities in contributing to their
partnership when they confront with the insufficient funds to meet the indemnification, and it
is the key outcome of the provision. Forth, The Act states that the prestige of a partner as an
LLP will always remain unchanged and effective until all partners cancel it through casting votes
or it can also be canceled 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.

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;

The inclusion of the Model Entity Transactions Act’s comprehensive provisions, Article 11; and
making clear the common law obligation of contract law includes the act’s compulsion of fair
dealing and good act, Section 409(d). Other changes were observed in the language of the
contract. These changes were taken out for the sake of the harmonization throughout the act.
The various stand-alone Acts are the part of harmonization project which comprises a “HUB”
and various spokes. Herein the harmonization project the each spoke in the stand-alone act
relates to a different type of organization. (ACT, 2018)

Contents of Uniform Partnership Act 1997 (Last Revised 2013)

Sr. Important Definitions

No.

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

2 Every partner’s benefits or property provided to the 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.
4 Any partnership that is formed under the law other than this state is known as a
foreign partnership.

5 A foreign partnership whose partners have limited liability is known as international

LLP.

6 A local partnership whose partners have limited liability is known as LLP.

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

8 The Jurisdiction that is responsible for the administration of internal affairs of an entity
through providing various laws is the jurisdiction of formation.
9 The connotation of two or more partners by sharing assets, profit, loss, etc. is called
partnership.
10 The agreement concerning the elements in section 105 (a) is called partnership
agreement.

11 All property, whether, personal, real, tangible, mixed, intangible, or any right or
interest there is known as property.

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

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

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This act has other definitions too, which clarify the above definitions, but the important ones
are described here. In short, Uniform Partnership Act defines all the rules and regulations, or
laws that are being followed in all partnerships in the USA.

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 and recently it is an approved law 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.

UPA went through many changes throughout this passage of time, which adjusted to the need
of latest partnership businesses, accordingly. All the details regarding recent UPA that is
amended in 2013 are giving in earlier explanations.

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 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
%20Amended%202013%29

 Donald J. Weidner & John W. Larson, the Revised Uniform Partnership Act: The
Reporters' Overview, 49 Bus. Law. 1 (1993).
 ULC. (2018). Diversity of Thought, Uniformity of Law. Retrieved from Uniform Law
Comission:
www.uniformlaws.org/Shared/Docs/Partnership/UPA%20_Final_2014_2015aug19.pdf