Question

Alex, Becky, Cindy, Deanna and Elias form a general partnership, Glorious Jeans, to manufacture coffee-colored clothing. Alex contributes 40% of the capital, Becky contributes 30% of the capital, Cindy contributes 20% of the capital, Deanna contributes 10% of the capital, and Elias agrees to design all the clothes. Under the UPA, how will the partners share the profits of their partnership? What would cause the UPA not to govern?

Answer 1

If no provision is stated, then under UPA , “each partner is entitled to an equal share of the partnership profits and is chargeable with a share of the partnership losses in proportion to the partner’s share of the profits.” The right to share in the profits is the reason people want to “make partner”: a partner will reap the benefits of other partners’ successes (and pay for their failures too). A person working for the firm who is not a partner is an associate and usually only gets only a salary.

The Uniform Partnership Act (UPA) provides governance for business partnershipsin several U.S. states. The UPA also offers regulations governing the dissolution of a partnership when a partner dissociates. It is what is known as a uniform act, which is similar in function to a model statute (a rule passed by legislators rather than courts or government agencies). The Uniform Partnership Act has undergone many amendments since it was first proposed in 1914 by the National Conference of Commissioners on Uniform State Laws (NCCUSL).