Monday, November 26, 2018

Teaching UPA v. Teaching RUPA

    Life is filled with difficult choices.  Chocolate or Vanilla?  Brady or Rogers?  Is that dress white/gold or blue/black?  And for law professors who teach Business Organizations, perhaps the most difficult choice of all:  UPA or RUPA?

    In all seriousness, and in the same vein as Joan’s earlier post on teaching fiduciary duty, the UPA/RUPA question when teaching partnership law is something that challenges me every year.  In the past, I focused on UPA and UPA cases, and then I briefly discussed RUPA as a point of contrast after finishing those materials.  My rationale, as I have explained elsewhere, was as follows:

    Despite the prevalence of RUPA in this country, the materials in this Chapter will discuss both UPA and RUPA.  There are several reasons for this dual treatment.  First, UPA is still the law in some commercially important states, including New York.  Second, UPA and RUPA share many common principles.  Because there is far more UPA case law than RUPA case law, however, many of the primary materials that are useful for teaching the basic principles of partnership law are based on UPA.  Third, it is easier to understand many of the significant changes in RUPA, particularly the dissociation and dissolution provisions, if one has a working knowledge of how those issues are dealt with under UPA.

While I am still comfortable with this rationale, the problem is that I never had time to do anything more with RUPA other than to set it up as a point of contrast—and for a single class at the most.  I always had the nagging feeling that my emphasis was backwards—my students should leave with a solid knowledge of RUPA and a passing familiarity with UPA, rather than the other way around.

    Over the past ten years or so, I have changed things.  Casebooks have gotten better about including RUPA-based cases (and there are now more of them), but most cases (and certainly the most “famous” cases) are still UPA-based.  Nevertheless, I tell my students that we are going to read and discuss all of the cases as if RUPA governed them.  I still discuss UPA, but I find that a brief discussion of the aggregate theory, the concept that partners joining and leaving the partnership leads to dissolution under that theory, and a few examples of aggregate-related problems (partnerships owning property, partnerships buying insurance) suffices to help the students understand why RUPA and its entity approach came about.  I feel much more confident that my students have a better grasp of RUPA (which is more important for them in Texas) and a passing familiarity with UPA, which I think is where they ought to be.  And when we get to LLCs, their familiarity with RUPA concepts is very helpful given that the modern uniform LLC statutes follow, in large part, the organization and logic of RUPA.

    I’m curious if others agree or disagree.  Assuming that you still teach general partnership law (and haven’t jettisoned it completely in favor of LLC materials, which is a subject for its own post), do you still teach UPA and, if so, why?

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I teach it exactly how you do. I focus on the RUPA and I tell them to consider how any cases decided under the UPA would be decided under the RUPA.

Posted by: Steve Bradford | Nov 26, 2018 9:22:24 AM

It's a good question, and I now follow your basic approach, for similar reasons. Minnesota uses RUPA, so it's more relevant for many of my students in practice, and RUPA is indeed much better preparation for LLCs, especially since I focus on RULLCA when I teach LLCs (Minnesota has adopted RULLCA, so that works out well). A main part of the reason for teaching partnerships is the influence they have had on LLC law, so that is an important consideration. One further point that you don't mention is that UPA is just more poorly written and confusing than RUPA, so it's harder to teach. Given the increasingly limited relevance of UPA, it's hard to justify spending much time struggling with it.

Posted by: Brett McDonnell | Nov 26, 2018 9:23:32 AM

Massachusetts is one of the 14 remaining UPA states and I think there are a couple more in New England. So, despite the MA adoption of the Uniform Bar Essay Exam, I find it sensible to teach both. I use two states, Uphoria and Ruphoria, and the relevant statute applies.

Posted by: Jeff Lipshaw | Nov 26, 2018 11:05:22 AM

Hi Doug - I honestly don't know what I'm going to do when I teach Business next semester. And another part of my decision is going to be which version of RUPA? Because the latest version is close to the LLC Acts, but there's a slightly earlier version that's closer to UPA and appears in many of the cases in my syllabus. I'm in Louisiana - our partnerships are governed by Louisiana's unique civil code, which means none of it applies here - I try to steer clear of civil code matters and leave that to the expert civilians on the Tulane faculty.

Posted by: Ann Lipton | Nov 26, 2018 3:21:03 PM

I started teaching in 2000. Tennessee had just adopted the RUPA. I mention the UPA from time to time but otherwise just teach the RUPA and, as you, Steve, and others do, use any UPA cases in the text as hypotheticals for the application of the RUPA.

Following this conversation . . . .

Posted by: joanheminway | Nov 27, 2018 6:20:52 AM

I taught RUPA, with some mention of UPA, for largely the reasons already mentioned. I avoided some of the gnarlier issues, focusing instead on the law (1) relevant to forming a partnership by accident and (2) that forms the basis for LP and LLP law.

That was for law students. For business students, I avoid the RUPA/UPA distinction entirely, teaching only (very limited) RUPA law. I still cover general partnerships, if only to warn students away from them and about the risk of forming one by accident.

Posted by: H. Justin Pace | Nov 27, 2018 10:30:04 AM

I sat for the Tennessee Bar Exam in 1996. Tennessee was then still operating under the UPA. During bar prep, we brought in our Tennessee partnership (and real property) outlines developed in law school for use by fellow examinees who had only been taught in a multi-state curriculum.

When teaching partnership law, I contrast the casebook materials with the plethora of Tennessee case law developed under the common law and UPA principles. Then, I delve into Tennessee’s RUPA statute to distinguish the changes. Quite frankly, with the advent of Tennessee’s adoption of the UBE (and, more or less elimination of State essay questions and State specific minimal competency), I think I’ll need to address myself primarily to RUPA (for bar exam success).

Posted by: Tom N. | Nov 27, 2018 2:54:45 PM

I follow Doug’s approach mainly because few of my Texas students will deal much with general partnerships formed in UPA states. If they find themselves with a Massachusetts enetity I hope they’ll figure out they need to do some research and not rely on their memories of class.

Posted by: Frank Snyder | Nov 27, 2018 3:00:14 PM

My apologies if multiple versions of this comment show up. (Somehow my comment disappeared twice as I was trying to write it.)

I’ve taught commercial law for many years and recently picked up the business associations course. The concept of a partner’s capital account, as provided for under the 1997 version of the Revised Uniform Partnership Act, section 401(a)(1) & (2), seems helpful. I was surprised to see that the latest amendments to the official text of RUPA eliminated it.

As far as I can tell, under the new version you have to piece together the concept of a capital account from the exclusion of partner remuneration for services under 401(j) and the rules for distribution under 806(b)(1) (including the value of a partner’s unreturned contributions, which under 401(j) would not include contributions of services).

Have the latest amendments to RUPA been widely adopted? I couldn’t find anything about adoptions on the Uniform Law Commission website. Does it make sense to teach the older version? Doug’s statutory supplement includes both.

I wonder also whether it made sense for the ULC to get rid of the concept of a capital account. Maybe the only real function of the old 401(a)(1) & (2) was to determine what each partner would receive when the business is wound up. So maybe the new RUPA approach makes sense.

I know these are all default rules. Do well-drafted partnership agreements still refer to capital accounts, perhaps not just for distribution on winding up but also for buyouts on retirement or other purposes?

Posted by: Mark Scarberry | Aug 19, 2019 8:06:44 PM

Hi Mark --

I remember discussing the capital account provisions with Dan Kleinberger. You probably saw this, but the explanation for eliminating the default capital account provision is in the comment to section 405.

By my count on the Uniform Law Commission website, there are 5 states that have enacted the 2011/2013 amendments to the partnership act, with a 6th considering it. At this point, I personally do not teach the 2011/2013 amendments, other than pointing out a few differences, such as the elimination of the capital accounts provision that you mentioned, the elimination of the sharing of "profits" rule, whether you always need a majority of partners to decide ordinary business decisions, and whether a partner in an at-will partnership can force dissolution (which I will post about shortly).

As to your last question on whether partnership agreements still refer to capital accounts, I would assume the answer is yes, but I have not done any research into the question.

Hope all is well,


Posted by: Douglas | Aug 23, 2019 8:00:49 AM

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