Uniform Partnership Act

Publication Date :

25 Jun, 2025

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Table of Contents

What Is Uniform Partnership Act (UPA)?

The Uniform Partnership Act (UPA) refers to the set of guidelines that governs partnership involvement in the United States. Starting from the creation of a partnership to its dissolution, this act contains regulations related to every stage of operation and dismissal. It operates not like a government agency or court but rather like a statute, a rule approved by a legislative body.

In relationships and matters pertaining to partnerships, the UPA aids in fostering justice, accountability, and predictability. These regulations fill in the gaps either when there is no partnership agreement or when the partnership agreement terms do not address a particular issue. In addition, it helps settle conflicts and gives partners a foundation for legal defense.

Key Takeaways

The Uniform Partnership Act (UPA) establishes guidelines for partnership dissolutions and regulates commercial ties in US states. The UPA fosters justice, accountability, and predictability in partnership relationships.
The UPA fills in gaps when there is no partnership agreement or when the agreement doesn't address a specific issue.
The Revised Uniform Partnership Act (RUPA) is a more recent version that addresses modern partnership practices and legal issues.
The latest revised UPA was the UPA 1997, which was amended in 2013 to give more clarity to the dissolution rules and also the effect of becoming an LLP while engaging in a partnership agreement.

Uniform Partnership Act Explained

The Uniform Partnership Act (UPA) is a series of rules specified by the Uniform Law Commission (ULC), also known as the National Conference of Commissioners on Uniform State Laws (NCCUSL), to govern business partnerships in the US. It provides standard regulations for partnership engagement along with answering corporate questions related to partnership creation, related assets, liabilities, fiduciary duties, and dissolution.

Except in cases where the limited partnership statute is conflicting, both general partnerships and limited liability partnerships are governed by the UPA. However, this act becomes void in the case of a limited partnership. About 44 districts and a few US states have their business relationships and regulations governed by the UPA. These guidelines take effect in the event that there is no partnership agreement or if there is one but it does not address a specific issue.

The ULC authorized the Uniform Partnership Act in 1914, and since then, it has undergone several amendments. The revised versions of the act that come up from time to time are often referred to as the Revised Uniform Partnership Act (RUPA). The most recent version was approved in 1997, and it was recently modified in 2013. Every UPA version is identified using the specific format - UPA , signifying the year in which the NCCUSL approved it.

States may choose to move away from the non-uniform provisions or adopt RUPA's uniform language. Except for Louisiana, every state ratified the UPA in 1914, and the majority of them later replaced it with an alternative revised version.

History

In 1902, NCCUSL took into consideration a uniform law of partnership. The resultant Uniform Partnership Act (UPA), which combined elements of the aggregate or common law and entity or mercantile theories, was enacted in 1914. In 1986, an American Bar Association subcommittee recommended extensive revisions to the UPA. In 1987, the Conference appointed a Drafting Committee to revise the UPA, which held its initial meeting in 1988.

In 1992, the amended UPA witnessed unanimous adoption and was renamed the Uniform Partnership Act 1993. At its 1994 Annual Meeting in Chicago, the UPA was overwhelmingly approved after one last set of revisions were added. Under the Revised Act, the Revised Act gave supremacy to the partnership agreement in many situations. August 1994 saw the American Bar Association House of Delegates endorse the UPA.

The timeline related to UPA and revisions include:

1914 – Original Uniform Partnership Act
1992 – ULC's Promulgation of Uniform Partnership Act (1992)
1993 – Amendments to Uniform Partnership Act (1992) - UPA (1993)
1994 – Amendments to Uniform Partnership Act (1993) - UPA (1994)
1996 – Amendments to Uniform Partnership Act (1994) Adds Limited Liability Partnership – UPA (1996)
1997 – Amendment to Uniform Partnership Act (1996), Section 801 – UPA (1997)

Uniform Partnership Act 1997 Revision

The NCCUSL appointed a Drafting Committee in 1995, aiming to have provisions for a limited liability partnership (LLP) in addition to a general partnership that had already formed part of the UPA since the very beginning. While RPA 1992 received approval, only two states were fund adopting the LLP legislation, but the number increased to over 40 by the time this provision received approval in 1996 at the NCCUSL annual meeting.

The 1997 version of the act dealt with four significant issues – the scope of liability shield of partners, the voting requirement for an entity to become an LLP, the effect of one entity turning into an LLP for a partnership agreement, and the annual filing needs. In short, this is where the UPA combined with the Limited Liability Partnership Amendments Act in 1997.

The Drafting Committee focused on rules for partnership breakups, with the Uniform Partnership Act 1997 aiming to provide stability for continuation agreements. The Act enhanced entity treatment of partnerships for state law purposes, particularly in property title for simplicity. However, it does not strictly apply the entity approach, retaining the aggregate approach for certain purposes like several and joint liability.

The revised 1997 version underwent a few changes in 2013 with respect to the language used. The 1997 version 409 (a) states that the fiduciary duties of one partner towards the other partners and partnership is loyalty. In addition, 409 (b) mentions that a partner's duty of loyalty to the partners and partnership is limited to certain conditions.

In both cases, the words – only and limited to, respectively – pose restrictions/give liberty to the involved parties to use the clause in a way that a couple of partners can gang up against one partner and trap them under this provision. As a result, the 2013 amendment was introduced whereby the terms - only and limited to – were removed from the 1997 version, making it a more feasible UPA law.

Uniform Partnership Act vs Revised Uniform Partnership Act

Some of the differences between both the concepts are:

Parameters	UPA	RUPA
1. Introduction	UPA is an older model law that was initially drafted in 1914.	RUPA is a more recent modification that was presented in 1994.
2. Coverage	Uniform Partnership Act 1914 is not extensive when compared to RUPA.	RUPA offers more detailed provisions addressing modern partnership practices and emerging legal issues, including changes in partner liability, dissociation, partnership property, and dissolution.
3. Dissolution	Under the Uniform Partnership Act 1914, a partnership dissolves with every member's departure. However, it rules to continue with the venture within 90 days after one partner leave. This helps ensure no immediate dissolution happens.	The Revised Act outlines that many dissociations or departures of members do not lead to dissolution. Similarly, much dissociation may result in a buyout of the withdrawing partner's interest rather than a winding up of the business. RUPA defines the substance and procedure of the buyout. It can be said that the Uniform Partnership Act dissolution is less comprehensive regarding dissolutions.