Chapter Three
General Partnerships
General Partnerships
A voluntary association of two or more
persons who agree to carry on business
together for profit.
Unlimited Personal Liability
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Liability for business debt, which extends beyond
what is invested in a business to an individual’s
personal assets
Law Governing Partnerships
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UPA: Uniform Partnership Act, model for
partnership legislation in about one-fourth of the
states
RUPA: Revised Uniform Partnership Act, model for
partnership legislation in about three-fourths of the
states
Partnerships by Categories (2008)
Arts, Entertainment and Recreation
2%
Health Care and Social Assistance
2%
Agricultural, Forestry, Fishing, and Hunting
5%
Accommodation and Food Services
4%
Retail Trade
5%
Construction
6%
Financing and Insurance
11%
Admin/Support/Waste Management/
Remediation Services
2%
Professional, Scientific, and Technical Services
6%
Real Estate/Rental/Leasing
46%
Other
11%
Advantages of General
Partnerships
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Ease of formation
Flexible management
Ease of raising capital
Pass-Through Taxation
Disadvantages of General
Partnerships
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Unlimited personal liability
Lack of continuity
Difficulty in transferring partnership interest
Partnership Agreement
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Name of the
partnership
Names and addresses
of the partners
Recitals
Purpose
Address
Term
Financial provisions
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Profits and losses
Management and
control
Admission of new
partners and
withdrawal of partners
Dissolution
Miscellaneous
provisions
Signature and dates
UPA Approach to Dissolution
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Under the UPA, dissolution of the partnership
triggers a winding up, namely, a wrapping up of
the business affairs of a partnership.
A variety of events can cause a dissolution,
including the following:
 the
ending of the term of a partnership;
 the withdrawal at will of any partner (if there is no
definite term or purpose of the partnership);
 unanimous agreement of all partners;
 and the death, expulsion, or bankruptcy of a partner.
RUPA Approach

To ameliorate the harsh effects of the UPA
approach requiring a dissolution and winding up of
a partnership every time a partner leaves the
enterprise, the RUPA provides that in almost all
cases, a partnership may buy out the interest of a
partner who leaves the partnership (such departure
being referred to as a dissociation), and the
partnership will continue its business.
Dissociation
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A withdrawal of a partner from a partnership; does
not necessarily cause a dissolution or termination of
partnership
Wrongful dissociation: a dissociation caused by a
breach of partnership agreement
Key Features of General Partnerships
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Partnerships are formed by agreement, either oral or written.
All partners share rights to manage the partnership.
Partners share profits and losses according to their agreement; if no
agreement, profits and losses are shared equally, regardless of
capital contribution.
Partners have unlimited personal liability for partnership obligations.
Liability is joint and several, meaning that each partner is
completely liable for any debt.
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Key Features of General Partnerships
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Partnerships are easily and inexpensively formed.
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Partners owe each other fiduciary duties.
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Under the UPA, nearly any withdrawal by a partner causes a
dissolution of the partnership.
Under the RUPA, withdrawal of a partner may not necessarily cause
a dissolution and winding up of the partnership; in many instances
the dissociating partner is bought out.
Partnerships file information tax returns but do not pay federal
taxes; all income, whether distributed or not, is passed through to the
partners who pay tax at their appropriate individual rates.
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