UPA vs. RUPA: Aggregate vs. Entity: The Implications

Depending on the state in which you organize your partnership, different laws will apply. With that goes the natural conclusion that there will be different results and different implications when running your partnership. All states follow either the Uniform Partnership Act (“UPA”) or Revised Uniform Partnership Act (“RUPA”). Florida, for example, follows the Revised Uniform Partnership Act. One major example of how the UPA and RUPA differ is their treatment of a partnership as an organization. The UPA treats the partnership as an aggregate, while the RUPA treats a partnership as an entity. While this difference may appear to be subtle, it has major implications on the running of a partnership.

The Uniform Partnership Act treats partnerships as aggregates. Under the UPA, a partnership is an association of two or more persons carrying on as co-owners a business for profit. Because this definition of a partnership emphasizes the association of co-owners, partnerships are treated as merely a representation of the partners. As such, if a partner leaves, the entire partnership will end, and cannot continue. Therefore, in a jurisdiction following the UPA, it is of the utmost importance to realize the implications of who to become partners with, and the implications of a partner leaving.

The Revised Uniform Partnership Act treats partnerships as entities. As such, it treats partnerships as having a separate existence than the partners. Due to this treatment, partnerships can continue to exist separate from the partners, and therefore can survive a partner leaving the partnership. Therefore, in jurisdictions that follow the Revised Uniform Partnership Act, such as Florida, the changing composition of a partnership is not as dire as in those states following the UPA.

The subtleties and differences in running a partnership under the Uniform Partnership Act and the Revised Uniform Partnership Act can be great. Therefore, it is important to understand the implications of running a partnership in either jurisdiction. Consulting with the right legal team that has worked at length with such statutes can make the difference in ensuring the smooth operation of your business. Call the Trembly Law Firm at (305) 431-5678 today to schedule a consultation.