Delaware’s partnership statutes are two chapters of Title 6 of the Delaware Code: the Delaware Revised Uniform Partnership Act (DRUPA), at Chapter 15, which governs general partnerships and limited liability partnerships, and the Delaware Revised Uniform Limited Partnership Act (DRULPA), at Chapter 17, which governs limited partnerships and limited liability limited partnerships. Both share the same design philosophy. They give partners wide freedom to write their own governance terms in the partnership agreement, and they supply default rules that take over wherever the agreement is silent. That combination is the reason so many partnerships organize under Delaware law even when the business itself operates somewhere else.
Which Statute Applies to Which Entity
DRUPA covers general partnerships. A general partnership exists whenever two or more people carry on a business together for profit, and the entity is treated as separate from the partners who own it.1Justia Law. Delaware Code Title 6 Chapter 15, Subchapter II – Section 15-201 A general partnership that wants to shield its partners from personal liability for partnership debts can register as a limited liability partnership (LLP) under the same chapter.
DRULPA covers limited partnerships. A limited partnership has at least one general partner who runs the business and at least one limited partner who contributes capital but stays out of management. A Delaware limited partnership can also elect to become a limited liability limited partnership (LLLP), which extends LLP-style liability protection to the general partners while leaving the limited partners’ existing shield intact.2Delaware Code Online. Title 6 Chapter 17, Subchapter II – Section 17-214
Delaware LLCs are a separate statute and are not covered here.
Forming the Entity
A general partnership can come into existence without any state filing, simply by two or more people doing business together for profit, though the Delaware Division of Corporations requires many general partnerships to register.3Delaware Division of Corporations. How to Form a New Business Entity To elect LLP status, a general partnership files a statement of qualification with the Secretary of State that lists its name, registered office and agent, the number of partners, and the LLP election itself.4Delaware Code Online. Title 6 Chapter 15, Subchapter X – Section 15-1001
A limited partnership must file a certificate of limited partnership with the Secretary of State. The certificate includes the partnership’s name, the address of its registered office, the name and address of its registered agent, and the name and address of each general partner.5Justia Law. Delaware Code Title 6 Chapter 17, Subchapter II – Section 17-201 The filing fee is $200.6Delaware Code Online. Title 6 Chapter 17, Subchapter XI – Section 17-1107 The entity’s name must include “Limited Partnership,” “L.P.,” or “LP.”7Justia Law. Delaware Code Title 6 Chapter 17, Subchapter I – Section 17-102 An LLLP designation adds “Limited Liability Limited Partnership,” “L.L.L.P.,” or “LLLP” to the name.2Delaware Code Online. Title 6 Chapter 17, Subchapter II – Section 17-214
Every Delaware limited partnership must maintain a registered office and a registered agent in the state. The agent accepts legal papers for the partnership and forwards them along with annual tax notices.8Justia Law. Delaware Code Title 6 Chapter 17, Subchapter I – Section 17-104
Who Is Personally Liable
In a general partnership without LLP status, every partner is jointly and severally liable for all obligations of the partnership. A creditor can pursue any single partner for the full amount of a partnership debt, not just that partner’s proportional share.9Justia Law. Delaware Code Title 6 Chapter 15, Subchapter III – Section 15-306 A new partner joining an existing partnership is not personally liable for obligations the partnership took on before they came aboard.
Partners also expose each other through their day-to-day conduct. Each partner acts as an agent of the entity, and a partner’s action that appears to be in the ordinary course of the partnership’s business binds the partnership even without the other partners’ approval, unless the partner lacked actual authority and the person on the other side knew that.10Justia Law. Delaware Code Title 6 Chapter 15, Subchapter III – Section 15-301
LLP status changes the picture. Once a general partnership is a registered LLP, obligations arising while the LLP election is in effect are solely the partnership’s debts, and no partner is personally liable just by being a partner.9Justia Law. Delaware Code Title 6 Chapter 15, Subchapter III – Section 15-306
In a limited partnership, the general partner carries personal liability for partnership debts. A limited partner is not liable for those debts unless the limited partner also serves as a general partner or participates in control of the business, and even then is only liable to people who reasonably believed, based on the limited partner’s conduct, that the limited partner was a general partner. Delaware’s “control” rule is forgiving. The statute lists a broad set of activities that do not count as participating in control, including consulting with or advising a general partner, voting on partnership matters, serving as an officer or director of a corporate general partner, and guaranteeing the partnership’s obligations.11Delaware Code Online. Title 6 Chapter 17, Subchapter III – Section 17-303 A limited partner has to go well beyond normal investor involvement before the shield is at risk.
The Partnership Agreement Controls
Both statutes treat the partnership agreement as the primary governing document and instruct courts to give “maximum effect” to the principle of freedom of contract.12Justia Law. Delaware Code Title 6 Chapter 15, Subchapter I – Section 15-103 Partners can expand, restrict, or completely eliminate fiduciary duties, including the duty of loyalty and the duty of care, in the agreement. The agreement can also limit or eliminate liability for breach of those duties. A general partner in a fund, for example, can negotiate provisions that shield it from liability for investment decisions that turn out badly, so long as the agreement spells out those protections.13Delaware Code Online. Title 6 Chapter 17, Subchapter XI – Section 17-1101
One duty cannot be waived. The implied covenant of good faith and fair dealing survives any attempt to eliminate it, and no one can limit liability for a bad-faith violation of it.12Justia Law. Delaware Code Title 6 Chapter 15, Subchapter I – Section 15-103 The implied covenant fills gaps the agreement doesn’t address. If a partner exercises a contractual right in a way no reasonable person would have expected when the agreement was signed, the Court of Chancery can find a breach of the implied covenant even though no express term was violated.
What the Default Rules Say
Where the partnership agreement stays silent, DRUPA supplies the terms. The most consequential default: if the agreement says nothing about splitting profits, each partner takes an equal share, and losses are charged in proportion to each partner’s profit share.14Justia Law. Delaware Code Title 6 Chapter 15, Subchapter IV – Section 15-401 Because many general partnerships operate on a handshake with no written agreement, these defaults often end up being the governing terms when a dispute erupts.
DRULPA likewise supplies defaults for limited partnerships, including the perpetual existence of the entity when the agreement sets no definite term and the two-thirds vote threshold for voluntary dissolution discussed below.15Delaware Code Online. Title 6 Chapter 17, Subchapter VIII – Section 17-801
What Limited Partners Can Ask to See
DRULPA gives limited partners a default right to demand information from the general partners, provided the request is reasonably related to the limited partner’s interest in the partnership. The categories include the partnership’s financial condition, its tax returns, a list of partner names and addresses, a copy of the partnership agreement, and details about each partner’s capital contributions.16Delaware Code Online. Title 6 Chapter 17, Subchapter III – Section 17-305
These rights come with caveats. The general partner can withhold information it reasonably considers a trade secret or whose disclosure could harm the partnership. The partnership agreement can expand or restrict these inspection rights, which is what most private equity and real estate fund agreements do. If a general partner refuses a proper request or fails to respond within five business days, the limited partner can ask the Court of Chancery to compel disclosure.16Delaware Code Online. Title 6 Chapter 17, Subchapter III – Section 17-305
Delaware Tax and Federal Treatment
Every domestic and foreign limited partnership, general partnership, and LLC formed or registered in Delaware owes an annual tax of $300 due by June 1. There is no return to file with the Division of Corporations; the amount is a flat fee. Missing the deadline triggers a $200 penalty plus 1.5% monthly interest on the unpaid tax and penalty. The tax is assessed for any year the entity is active at any point between January 1 and December 31, with no proration for partial years.17Delaware Division of Corporations. LLC/LP/GP Franchise Tax Instructions
Federal tax treatment is pass-through. The partnership itself pays no income tax; it files Form 1065 as an informational return and issues each partner a Schedule K-1 showing their share of income, deductions, and credits. Partners are not employees of the partnership and should not receive a W-2.18Internal Revenue Service. Partnerships
How the Partnership Ends
Under DRUPA, a general partnership dissolves on specific triggering events. In a partnership with no fixed term, any partner can dissolve it by giving notice of intent to withdraw. In a partnership formed for a definite term, dissolution requires agreement of all partners, expiration of the term, or a vote by at least half the remaining partners within 90 days after a partner’s death or other qualifying departure. A partner or transferee can also petition the Court of Chancery for judicial dissolution if carrying on the business in conformity with the agreement is no longer reasonably practicable.19Justia Law. Delaware Code Title 6 Chapter 15, Subchapter VIII – Section 15-801
A limited partnership dissolves on the first of several events: a time specified in the agreement (or never, since Delaware LPs have perpetual existence by default), the withdrawal of a general partner when no other general partner remains and the agreement doesn’t provide for continuation, or a vote of all general partners and limited partners owning more than two-thirds of the profit interest. The two-thirds threshold can be changed by the partnership agreement.15Delaware Code Online. Title 6 Chapter 17, Subchapter VIII – Section 17-801
Once dissolved, the entity enters a winding-up period during which someone settles lawsuits, sells assets, and pays creditors. For a general partnership, creditors (including partners owed money as creditors) are paid first, and the remainder is distributed to partners based on the net balance in their capital accounts; a partner whose account shows a deficit must contribute the shortfall.20Delaware Code Online. Title 6 Chapter 15, Subchapter VIII – Section 15-80721Justia Law. Delaware Code Title 6 Chapter 17, Subchapter II – Section 17-2036Delaware Code Online. Title 6 Chapter 17, Subchapter XI – Section 17-1107
Where Disputes Get Decided
Both statutes route key disputes to the Delaware Court of Chancery. The Court of Chancery is an equity court with broad jurisdiction over business matters, including partnership disputes.22Delaware Courts. Jurisdiction of the Court of Chancery Petitions for judicial dissolution land there,19Justia Law. Delaware Code Title 6 Chapter 15, Subchapter VIII – Section 15-801 as do actions by limited partners to compel access to partnership records.16Delaware Code Online. Title 6 Chapter 17, Subchapter III – Section 17-305
Cases are decided by a single chancellor or vice chancellor, with no jury. Partnership disputes tend to be document-heavy fights over the meaning of specific agreement provisions, and the body of case law the court has built around DRUPA and DRULPA gives drafters a relatively reliable way to predict how new agreement terms will be interpreted. That predictability, together with the contractual freedom the statutes grant, is a large part of why Delaware remains the default choice for partnership formation.