Partnership Agreement — Scope, Function, and Limitations
Checkout our iOS App for a better way to browser and research.
Except as otherwise provided in subsections (c) and (d), the partnership agreement governs:
Relations among the partners as partners and between the partners and the limited partnership;
The activities and affairs of the partnership and the conduct of those activities and affairs; and
The means and conditions for amending the partnership agreement.
To the extent the partnership agreement does not provide for a matter described in subsection (a), this chapter governs the matter.
A partnership agreement shall not:
Vary the law applicable under § 61-3-103;
Vary a limited partnership's capacity under § 61-3-110 to sue and be sued in its own name;
Vary § 61-3-204;
Vary the right of a general partner under § 61-3-406(b)(2) to vote on or consent to an amendment to the certificate of limited partnership deleting a statement that the limited partnership is a limited liability limited partnership;
Vary the notice requirements under § 61-3-102 or under this chapter in a manner that is manifestly unreasonable;
Vary the requirements with respect to the limited partnership's name under § 61-3-112;
Vary the requirement under § 61-3-119 regarding the Workers' Compensation Law, compiled in title 50, chapter 6;
Eliminate or vary the restrictions on reimbursement and indemnification contained in § 61-3-408(a) and (b);
Eliminate or vary the potential for personal liability of a general partner under § 61-3-404;
Eliminate or vary this section;
Eliminate or vary the limitations on distributions in § 61-3-504;
Eliminate or vary the liability for unlawful distributions in § 61-3-505;
Unreasonably restrict a right to information or access to records under § 61-3-304 or § 61-3-407;
Eliminate or restrict the duty of loyalty under § 61-3-409(b)(1) or (b)(2), except to the extent provided by subsection (d);
Unreasonably reduce the duty of care under § 61-3-409;
Eliminate the obligation of good faith and fair dealing under § 61-3-305(a) and § 61-3-409(d), but the partnership agreement may determine standards by which the performance of the obligation is to be measured, if the standards are not manifestly unreasonable;
Vary the grounds for expulsion specified in § 61-3-603(5)(B);
Vary the power of person to dissociate as a general partner under § 61-3-604(a), except to require that the notice under § 61-3-603(1) be in a record;
Vary the causes of dissolution specified in § 61-3-801(a)(6);
Vary the requirement to wind up the partnership's activities and affairs as specified in § 61-3-802(a), (b)(1)(B), and (d);
Vary the provisions of § 61-3-905, but the partnership agreement may provide that the partnership shall not have a special litigation committee;
Vary any requirements relating to documents required to be filed with the secretary of state or any register of deeds, or otherwise vary or restrict any other rights of the secretary of state or any register of deeds; and
Except as provided in §§ 61-3-105 and 61-3-106(b), vary or restrict any rights of any person under this chapter, other than a partner.
Without limiting other terms that may be included in a partnership agreement, the following applies:
The partnership agreement may:
Specify the method by which a specific act or transaction that would otherwise violate the duty of loyalty may be authorized or ratified by one (1) or more disinterested and independent persons after full disclosure of all material facts; and
Alter the prohibition in § 61-3-504(a)(2) so that the prohibition requires only that the partnership's total assets not be less than the sum of its total liabilities; and
If not manifestly unreasonable, the partnership agreement may:
Alter or eliminate the aspects of the duty of loyalty stated in § 61-3-409(b)(1) or (b)(2);
Identify specific types or categories of activities that do not violate the duty of loyalty;
Alter the duty of care, but shall not authorize conduct involving bad faith, willful or intentional misconduct, or knowing violation of law; and
Alter or eliminate any other fiduciary duty.
The court shall decide as a matter of law whether a term of a partnership agreement is manifestly unreasonable under subdivision (c)(5), (c)(16), or (d)(2). The court:
Shall make its determination as of the time the challenged term became part of the partnership agreement and by considering only circumstances existing at that time; and
May invalidate the term only if, in light of the purposes, activities, and affairs of the limited partnership, it is readily apparent that:
The objective of the term is unreasonable; or
The term is an unreasonable means to achieve its objective.