(This is Section 1206 of the Uniform Partnership Act (1997).)

This section provides for a transition period in the applicability of the Act to existing partnerships, similar to that provided in the revised Texas partnership act. See Tex. Rev. Civ. Stat. Ann. art. 6132b10.03 (Vernon Supp. 1994). Subsection (a) makes application of the Act mandatory for all partnerships formed after the effective date of the Act and permissive, by election, for existing partnerships. That affords existing partnerships and partners an opportunity to consider the changes effected by RUPA and to amend their partnership agreements, if appropriate.

Under subsection (b), application of the Act becomes mandatory for all partnerships, including existing partnerships that did not previously elect to be governed by it, upon a future date to be established by the adopting State. Texas, for example, deferred for five years mandatory compliance by existing partnerships.

Subsection (c) provides that an existing partnership may voluntarily elect to be governed by RUPA in the manner provided for amending its partnership agreement. Under UPA Section 18(h), that requires the consent of all the partners, unless otherwise agreed. Third parties doing business with the partnership must know or be notified of the election before RUPA's rules limiting a partner's liability become effective as to them. Those rules would include, for example, the provisions of Section 704 limiting the liability of a partner 90 days after the filing of a statement of dissociation. Without knowledge of the partnership's election, third parties would not be aware that they must check the record to ascertain the extent of a dissociated partner's personal liability.

§1105.__Rules of construction

1.__Savings clause.__This chapter does not affect an action or proceeding commenced or right accrued before this chapter takes effect.

2.__Freedom to contract.__It is the policy of the chapter to give maximum effect to the freedom of contract and to the enforceability of partnership agreements.

3.__Law and equity.__Unless displaced by particular provisions of this chapter, the principles of law and equity supplement this chapter.