Summary
Summary UBE - Unincorporated Businesses (Notes)
- Module
- New York Bar Exam
- Institution
- New York Bar Exam
Limited Partnerships Limited Liability Partnerships Limited Liability Companies
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UNINCORPORATED BUSINESSES1) Limited Partnerships
A limited partnership requires the following. Firstly, there must be at least one general partner and at
least one limited partner. Secondly, a certificate of limited partnership must include the name and
address of the limited partnership (and its representative agents if any), its acknowledgment as an LP,
and signed by all of the general partners (not limited partners). Thirdly, the partnership must include
‘LP’ or ‘limited partnership’ at the end of its name. Lastly, the certificate must be filed with the
secretary of state, which is when the limited partnership comes into effect.
In a limited partnership, only the general partners or limited partners with dual capacity as general
partners are liable for the partnership’s obligations, whereas the limited partners are only liable for
their own wrongful torts.
General partners owe the same duties to the partnership as partners do in a general partnership, such
as the duty of care and loyalty.
General partners may dissociate from the partnership at any time, but not limited partners.
2) Limited Liability Partnerships (RUPA)
Under the Revised Uniform Partnership Act (RUPA), a limited liability partnership requires the
following. Firstly, a statement of qualification must include the name and address of the limited
partnership and signed by at least two partners. Secondly, it must include ‘LLP’ or ‘RLLP’ at the end
of its name. Lastly, the statement must be filed with the secretary of state, which is when the limited
liability partnership comes into effect.
In a limited liability partnership, there are only partners, not general nor limited partners. The
advantage is that none of the partners are liable for the partnership’s obligations. However, they may
receive indemnification from the partnership if required to pay damages to any third parties injured
by the partnership. If indemnification is not sufficient, they can request relief from any partners who
are personally liable to the third parties, but not contributions because partners are not liable for the
partnership’s actions.
Partners owe duties of care and loyalty to the partnership.
Partners may dissociate from the partnership in the same manner as general partnerships.
3) Limited Liability Company (ULLCA)
Under the Uniform Limited Liability Company Act (ULLCA), a limited liability company requires
the following. Firstly, there must be at least one member or manager, depending on how the company
will be run. Members are designated by their contributions towards the LLC, whether in the form of
cash or property, for their ownership in the LLC. Whereas managers are appointed by the members.
Secondly, a certificate of organization must include the name and address of the company. Third, the
name of the company must end with ‘limited liability company’ or ‘LLC’. Lastly, the certificate must
be filed with the secretary of state, which is when the company comes into effect.
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