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(1) “Business” includes every trade, occupation, and profession.
(2) “Debtor in bankruptcy” means a person who is the subject of:
(i) an order for relief under Title 11 of the United States Code or a
comparable order under a successor statute of general application; or
(ii) a comparable order under federal, state, or foreign law governing
(3) “Distribution” means a transfer of money or other property from a
partnership to a partner in the partner’s capacity as a partner or to the partner’s
(4) “Foreign limited liability partnership” means a partnership that:
(i) is formed under laws other than the laws of this State; and
(ii) has the status of a limited liability partnership under those laws.
(5) “Limited liability partnership” means a partnership that has filed a
statement of qualification under Section 1001 and does not have a similar statement
in effect in any other jurisdiction.
(6) “Partnership” means an association of two or more persons to carry on
as co-owners a business for profit formed under Section 202, predecessor law, or
comparable law of another jurisdiction.
(7) “Partnership agreement” means the agreement, whether written, oral,
or implied, among the partners concerning the partnership, including amendments to
the partnership agreement.
(8) “Partnership at will” means a partnership in which the partners have
not agreed to remain partners until the expiration of a definite term or the
completion of a particular undertaking.
(9) “Partnership interest” or “partner’s interest in the partnership” means
all of a partner’s interests in the partnership, including the partner’s transferable
interest and all management and other rights.
(10) “Person” means an individual, corporation, business trust, estate,
trust, partnership, association, joint venture, government, governmental subdivision,
agency, or instrumentality, or any other legal or commercial entity.
(11) “Property” means all property, real, personal, or mixed, tangible or
intangible, or any interest therein.
(12) “State” means a State of the United States, the
District of Columbia, the Commonwealth of Puerto Rico, or any territory or insular
possession subject to the jurisdiction of the United States.
(13) “Statement” means a statement of partnership authority under Section
303, a statement of denial under Section 304, a statement of dissociation under
Section 704, a statement of dissolution under Section 805, a statement of merger
under Section 907, a statement of qualificationunder Section 1001, a statement of
foreign qualificationunder Section 1102, or an amendment or cancellationof any of
(14) “Transfer” includes an assignment, conveyance, lease, mortgage,
deed, and encumbrance.
These Comments include the original Comments to the RevisedUniform
Partnership Act (RUPA or the Act) and the new Comments to the Limited Liability
Partnership Act Amendments to the Uniform Partnership Act (1994). The new
Comments regarding limited liabilitypartnerships are integrated into the RUPA
The RUPA continues the definition of “business”from Section 2 of the
Uniform Partnership Act (UPA).
RUPA uses the more contemporary term “debtor in bankruptcy” instead of
“bankrupt.” The definition is adapted from the new Georgia Partnership Act, Ga.
Code Ann. § 14-8-2(1). The definition does not distinguish between a debtor whose
estate is being liquidated under Chapter 7 of the Bankruptcy Code and a debtor who
is being rehabilitated under Chapter 11, 12, or 13 and includes both. The filingof a
voluntary petition under Section 301 of the Bankruptcy Code constitutes an order
for relief, but the debtor is entitled to notice and an opportunity to be heard before
the entry of an order for reliefin an involuntary case under Section 303 of the Code.
The term also includes a debtor who is the subject of a comparable order under state
or foreign law.
The definition of “distribution” is new and adds precision to the accounting
rules establishedin Sections 401 and 807 and related sections. Transfers to a
partner in the partner’s capacityas a creditor, lessor, or employee of the partnership,
for example, are not “distributions.”
The definition of a “foreign limited liabilitypartnership” includes a
partnership formed under the laws of another State, foreign country, or other
jurisdiction provided it has the status of a limited liabilitypartnership in the other
jurisdiction. Since the scope and nature of foreign limited liabilitypartnership
liabilityshieldsmay vary in different jurisdictions, the definition avoids reference to
similaror comparable laws. Rather, the definition incorporates the concept of a
limited liabilitypartnership in the foreign jurisdiction, however defined in that
jurisdiction. The reference to formation “under laws other than the laws of this
State” makes clear that the definition includes partnerships formed in foreign
countries as wellas in another State.
The definition of a “limited liabilitypartnership” makes clear that a
partnership may adopt the specialliabilityshieldcharacteristics of a limited liability
partnership simplyby filinga statement of qualificationunder Section 1001. A
partnership may file the statement in this State regardless of where formed. When
coupled with the governing law provisions of Section 106(b), this definition
simplifiesthe choice of law issues applicableto partnerships with multi-state
activities and contacts. Once a statement of qualificationis filed, a partnership’s
internal affairs and the liabilityof its partners are determined bythe law of the State
where the statement is filed. See Section 106(b). The partnership may not vary this
particular requirement. See Section 103(b)(9).
The reference to a “partnership” in the definition of a limited liability
partnership makes clear that the RUPA definition of the term rather than the UPA
concept controls for purposes of a limited liabilitypartnership. Section 101(6)
defines a “partnership” as “an association of two or more persons to carry on as co-
owners a businessfor profit formed under Section 202, predecessor law, or
comparable law of another jurisdiction.” Section 202(b) further provides that “an
association formed under a statute other than this [Act], a predecessor statute, or a
comparable statute of another jurisdiction is not a partnership under this [Act].”
This language was intended to clarifythat a limited partnership is not a RUPA
general partnership. It was not intended to preclude the application of any RUPA
general partnership rules to limited partnerships where limited partnership law
otherwise adopts the RUPA rules. See Comments to Section 202(b) and Prefatory
The effect of these definitions leaves the scope and applicabilityof RUPA
to limited partnerships to limited partnership law, not to sever the linkage between
the two Acts in allcases. Certain provisions of RUPA willcontinue to govern
limited partnerships by virtue of RevisedUniform Limited Partnership Act (RULPA)
Section 1105 which provides that “in any case not provided for in this [Act] the
provisions of the Uniform Partnership Act govern.” The RUPA partnership
definition includes partnerships formed under the UPA. Therefore, the limited
liabilitypartnership rules willgovern limited partnerships “in any case not provided
for” in RULPA. Since RULPA does not provide for any rules applicableto a
limited partnership becoming a limited liabilitypartnership, the limited liability
partnership rules should applyto limited partnerships that file a statement of
Partner liabilitydeserves specialmention. RULPA Section 403(b) provides
that a general partner of a limited partnership “has the liabilitiesof a partner in a
partnership without limited partners.” Thus limited partnership law expressly
references general partnership law for general partner liabilityand does not
separatelyconsider the liabilityof such partners. The liabilityof a general partner of
a limited partnership that becomes a LLLP would therefore be the liabilityof a
general partner in an LLP and would be governed bySection 306. The liabilityof a
limited partner in a LLLP is a more complicated matter. RULPA Section 303(a)
separatelyconsiders the liabilityof a limited partner. Unless also a general partner, a
limited partner is not liablefor the obligations of a limited partnership unless the
partner participates in the control of the businessand then only to persons
reasonablybelievingthe limited partner is a general partner. Therefore, arguably
limited partners in a LLLP willhave the specificRULPA Section 303(c) liability
shieldwhile general partners willhave a superior Section 306(c) liabilityshield. In
order to clarifylimited partner liabilityand other linkage issues, States that have
adopted RUPA, these limited liabilitypartnership rules, and RULPA may wish to
consider an amendment to RULPA. A suggested form of such an amendment is:
SECTION 1107. LIMITED LIABILITY LIMITED PARTNERSHIP.
(a) A limited partnership may become a limited liabilitypartnership by:
(1) obtaining approval of the terms and conditions of the limited
partnership becoming a limited liabilitylimited partnership bythe vote necessaryto
amend the limited partnership agreement except, in the case of a limited partnership
agreement that expresslyconsiders contribution obligations, the vote necessaryto
amend those provisions;
(2) filinga statement of qualificationunder Section 1001(c) of the
Uniform Partnership Act (1994); and
(3) complying with the name requirements of Section 1002 of the
Uniform Partnership Act (1994).
(b) A limited liabilitylimited partnership continues to be the same entity
that existed before the filingof a statement of qualificationunder Section 1001(c) of
the Uniform Partnership Act (1994).
(c) Sections 306(c) and 307(b) of the Uniform Partnership Act (1994)
applyto both general and limited partners of a limited liabilitylimited partnership.
“Partnership” is defined to mean an association of two or more persons to
carry on as co-owners a businessfor profit formed under Section 202 (or
predecessor law or comparable law of another jurisdiction), that is, a general
partnership. Thus, as used in RUPA, the term “partnership” does not encompass
limited partnerships, contrary to the use of the term in the UPA. Section 901(3)
defines “limited partnership” for the purpose of Article 9, which deals with
conversions and mergers of general and limited partnerships.
The definition of “partnership agreement” is adapted from Section 101(9)
of RULPA. The RUPA definition is intended to include the agreement among the
partners, including amendments, concerning either the affairs of the partnership or
the conduct of its business. It does not include other agreements between some or
allof the partners, such as a lease or loan agreement. The partnership agreement
need not be written; it may be oral or inferred from the conduct of the parties.
Any partnership in which the partners have not agreed to remain partners
until the expiration of a definite term or the completion of a particular undertaking is
a “partnership at will.” The distinction between an “at-will” partnership and a
partnership for “a definite term or the completion of a particular undertaking” is
important in determining the rights of dissociating and continuing partners following
the dissociation of a partner. See Sections 601, 602, 701(b), 801(a), 802(b), and
It is sometimes difficult to determine whether a partnership is at willor is
for a definite term or the completion of a particular undertaking. Presumptively,
every partnership is an at-will partnership. See, e.g., Stone v. Stone, 292 So. 2d 686
(La. 1974); Frey v. Hauke, 171 Neb. 852, 108 N.W.2d 228 (1961). To constitute a
partnership for a term or a particular undertaking, the partners must agree (i) that
the partnership willcontinue for a definite term or until a particular undertaking is
completed and (ii) that they willremain partners until the expiration of the term or
the completion of the undertaking. Both are necessaryfor a term partnership; if the
partners have the unrestricted right, as distinguished from the power, to withdraw
from a partnership formed for a term or particular undertaking, the partnership is
one at will, rather than a term partnership.
To find that the partnership is formed for a definite term or a particular
undertaking, there must be clear evidence of an agreement among the partners that
the partnership (i) has a minimumor maximum duration or (ii) terminates at the
conclusion of a particular venture whose time is indefinite but certain to occur. See,
e.g., Stainton v. Tarantino, 637 F. Supp. 1051 (E.D. Pa. 1986) (partnership to
dissolve no later than December 30, 2020); Abel v. American Art Analog, Inc., 838
F.2d 691 (3d Cir. 1988) (partnership purpose to market an art book); 68th Street
Apts., Inc. v. Lauricella, 362 A.2d 78 (N.J. Super. Ct. 1976) (partnership purpose
to construct an apartment building). A partnership to conduct a businesswhich may
last indefinitely,however, is an at-will partnership, even though there may be an
obligation of the partnership, such as a mortgage, which must be repaid bya certain
date, absent a specificagreement that no partner can rightfully withdraw until the
obligation is repaid. See, e.g., Page v. Page, 55 Cal. 2d. 192, 359 P.2d 41 (1961)
(partnership purpose to operate a linensupply business);Frey v. Hauke, supra
(partnership purpose to contract and operate a bowling alley);Girard Bank v.
Haley, 460 Pa. 237, 332 A.2d 443 (1975) (partnership purpose to maintain and
“Partnership interest” or “partner’s interest in the partnership” is defined to
mean allof a partner’s interests in the partnership, including the partner’s
transferable interest and allmanagement and other rights. A partner’s “transferable
interest” is a more limited concept and means only his share of the profits and losses
and right to receive distributions, that is, the partner’s economic interests. See
Section 502 and Comment. Compare RULPA § 101(10) (“partnership interest”
includes partner’s economic interests only).
The definition of “person” is the usual definition used bythe National
Conference of Commissioners on Uniform State Laws (NCCUSL or the
Conference). The definition includes other legal or commercial entities such as
“Property” is defined broadly to include alltypes of property, as wellas any
interest in property.
The definition of “State” is the Conference’s usual definition.
The definition of “statement” is new and refers to one of the various
statements authorized byRUPA to enhance or limit the agency authority of a
partner, to deny the authority or status of a partner, or to give notice of certain
events, such as the dissociation of a partner or the dissolution of the partnership.
See Sections 303, 304, 704, 805, and 907. Generally,Section 105 governs the
execution, filing, and recording of allstatements. The definition also makes clear
that a statement of qualificationunder Section 1001 and a statement of foreign
qualificationunder Section 1102 are considered statements. Both qualification
statements are therefore subject to the execution, filing, and recordation rules of
“Transfer” is defined broadly to include allmanner of conveyances,
including leasesand encumbrances.
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