Section 106. Governing Law

The law of this State governs relations among the partners of a limited partnership and between the partners and the limited partnership and the liability of partners as partners for an obligation of the limited partnership.

Comment

To partially define its scope, this section uses the phrase “relations among the partners of a limited partnership and between the partners and the limited partnership.” Section 110(a) uses essentially identical language in defining the proper realm of the partnership agreement: “relations among the partners and between the partners and the partnership.”

Despite the similarity of language, this section has no bearing on the power of a partnership agreement to vary other provisions of this Act. It is quite possible for a provision of this Act to involve “relations among the partners of a limited partnership and between the partners and the limited partnership” and thus come within this section, and yet not be subject to variation by the partnership agreement. Although Section 110(a) grants plenary authority to the partnership agreement to regulate “relations among the partners and between the partners and the partnership,” that authority is subject to Section 110(b).

For example, Section 408 (General Standards of General Partners’s Conduct) certainly involves “relations among the partners of a limited partnership and between the partners and the limited partnership.” Therefore, according to this section, Section 408 applies to a limited partnership formed or otherwise subject to this Act. Just as certainly, Section 408 pertains to “relations among the partners and between the partners and the partnership” for the purposes of Section 110(a), and therefore the partnership agreement may properly address matters covered by Section 408. However, Section 110(b)(5), (6), and (7) limit the power of the partnership agreement to vary the rules stated in Section 408. See also, e.g., Section 502(c) (stating creditor’s rights, which are protected under Section 110(b)(13) from being restricted by the partnership agreement) and Comment to Section 509.

This section also applies to “the liability of partners as partners for an obligation of a limited partnership.” The phrase “as partners” contemplates the liability shield for limited partners under Section 303 and the rules for general partner liability stated in Section 404. Other grounds for liability can be supplied by other law, including the law of some other jurisdiction. For example, a partner’s contractual guaranty of a limited partnership obligation might well be governed by the law of some other jurisdiction.

Transferees derive their rights and status under this Act from partners and accordingly this section applies to the relations of a transferee to the limited partnership.

The partnership agreement may not vary the rule stated in this section. See Section 110(b)(2).