Business Organizations

Front 1

Entity v. Aggregate Approach
(UPA)

Back 1

Under UPA a partnership is an aggregate of individuals.

Front 2

Entity v. Aggregate Approach
(RUPA)

Back 2

Under RUPA a partnership is a separate legal entity from its individual partners.

Front 3

Right to Sue and Be Sued
(UPA)

Back 3

Under UPA, the partnership does not have the right to sue or be sued under its own name. In order to sue a partnership, every individual partner must be named. If one is not, the whole suit will be dismissed.

Front 4

Right to Sue and Be Sued
(RUPA)

Back 4

Under RUPA the partnership has the right to sue and be sued. Partners are jointly liable for contract negotiations which means every partner does not have to be named in order to not have the plaintiff's suit dismissed.

Front 5

Right to Sue and Be Sued
(Which is Better)

Back 5

RUPA takes a superior approach because it makes it clear when a partnership may be held liable and it eliminates having to name every partner thereby lowering transaction costs. It also comports more to the reasonable expectations of those who do business with partnerships than the UPA approach.

Front 6

Property Ownership
(UPA)

Back 6

Under UPA a partnership cannot own property, partners hold property as tenancy in partnership.

Front 7

Property Ownership
(RUPA)

Back 7

Under RUPA property acquired by the ownership is property owned by the partnership, not by the individual partners.

Front 8

Property Ownership
(Which is Better)

Back 8

RUPA has a superior approach because it creates more clarity and certainty by abolishing tenancy in partnership. It is also simpler so the unwary are less likely to fall into a trap.

Front 9

Ability to Exist Beyond Partners
(UPA)

Back 9

Under UPA every time a partner changes (leaves, dies, etc.) the partnership is terminated and a new partnership has to be formed.

Front 10

Ability to Exist Beyond Partners
(RUPA)

Back 10

Under RUPA the partnership is able to exist beyond the individual partners and is not terminated every time the make up of the partnership changes.

Front 11

Ability to Exist Beyond Partners
(Which is Better)

Back 11

RUPA's approach is better because it lowers the risk of entering into a partnership, the uncertainty, and the transaction costs. Under UPA third parties who have made contracts with the partnership before a change are technically no longer liable to the partnership because the parties to the contract have changed. Thus, every time a partner changes new contracts have to be executed.

Front 12

Liability
(UPA)

Back 12

UPA does not provide for the creation of limited liability partnerships.

Front 13

Liability
(RUPA)

Back 13

RUPA provides for the creation of limited liability partnerships. Small business may operate as partnerships and get limited liability by simply filling out a form. Even if a partnership does not file for limited liability, RUPA still has the exhaustion rule. The exhaustion rules states that a plaintiff must go after the partnership before they go after the partners. This buys the partners time to do some tactical estate planning.

Front 14

Liability
(Which is Better)

Back 14

RUPA has a better approach because it allows small businesses to operate as corporations without the formalities and still receive limited liability. RUPA is also better because people who do business expect business assets to fund obligations, not personal assets.

Front 15

Fiduciary Duties
(UPA)

Back 15

UPA refers to agency principals as the source of its fiduciary duties. These include the duty of care, obedience, disclosure, and loyalty. The duty of good faith and fair dealing was not created because this duty did not exist when UPA was created.

Front 16

Fiduciary Duties
(RUPA)

Back 16

Fiduciary duties are specifically encompassed in RUPA, including the duty of good faith and fair dealing. However Section 1.03 affords clarity on which duties may be altered in the partnership agreement (such as the duty of disclosure) and what may not be.

Front 17

Fiduciary Duties
(Which is Better)

Back 17

There is a mixed conclusion on which approach is better. RUPA has the duty of good faith and fair dealing which is a positive. However, RUPA might have went to far by allowing the duty of disclosure to be contractually obliterated. The duty to disclose should be an inherent fiduciary duty.

Front 18

Dissolution
(UPA)

Back 18

Under UPA wrongful disolvers are liable for damages caused by the wrongful dissolution and are deprived of their interest in the goodwill of the partnership.

Front 19

Dissolution
(RUPA)

Back 19

Under RUPA wrongful disolvers are liable for damages caused by the wrongful dissolution only.

Front 20

Dissolution
(Which is Better)

Back 20

RUPA takes an improved approach because contract breachers are not evil in terms of culpability and should not be punished arbitrarily or capriciously in ways that have nothing to do with their conduct.

Front 21

Individual Partners Right to Sue
(UPA)

Back 21

Under UPA an individual partner may not sue the partnership for damages but is instead limited to a suit for accounting. Consequently, a partner's sole remedy is an equitable suit for dissolution or accounting.

Front 22

Individual Partners Right to Sue
(RUPA)

Back 22

RUPA allows a partner to sue under tort or any theory rather than being limited in remedies.

Front 23

Individual Partners Right to Sue
(Which is Better)

Back 23

RUPA takes an improve approach because it recognizes an individual partner's right to suit an allows the possibility for damages if a serious tort has been committed against them.