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What is the Uniform Partnership Act?

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  • Written By: Patrick Roland
  • Edited By: Kathryn Hulick
  • Last Modified Date: 14 November 2016
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The Uniform Partnership Act, also known as the UPA, is a set of legal guidelines that define a business partnership in the United States. The act defines what constitutes a partnership between multiple individuals or companies, how the partnership exists, and who is responsible for the actions of the partners in business situations. This act was created in 1914 and did not change for several decades until it was revised several times in the 1990s.

Prior to 1914, most business partnerships were not regulated and legal disputes were common when a contract was not drawn up before the partnership. The Uniform Partnership Act, in short, states that partners in any business venture will equally share in profits and financial responsibilities. One major exception occurs when a contract is created prior to the partnership, because whatever provisions are mentioned there will overrule the uniform act.

The Uniform Partnership Act also defines a few other aspects of business partnerships. Property, under the UPA, is equally owned by all members of the partnership unless otherwise stated. Decision making is also covered in the act, saying that if one partner performs an action, like paying off creditors with partnership property or going into arbitration, the rest of the partners are not held responsible unless they previously met and agreed to the decision. When laws are broken by any member of the partnership, however, the act states that all other members are to be held accountable.

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In the early 1990s, the UPA was revised several times in order to better serve partnerships in modern business. The result is the Revised Uniform Partnership Act. This new act better reflects the current world of business, mainly because the idea of partnerships has changed drastically since the original act was penned.

The biggest difference between the original Uniform Partnership Act and the revised version deals specifically with partners leaving the agreement. Before the revision, a partner leaving resulted in the dissolution of the partnership, but now partners can dissociate themselves from the group and that partnership can continue to exist. The revision also gives partners greater freedom to restrict the rights of other partners as long as this is written in the partnership agreement prior to the creation of the union. Certain things are not flexible and can not be included in agreements, like restrictions to company records and denying a partner the right to withdrawal from a partnership.

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