1. The exceptions to the general rule of shareholder limited liability are that shareholders will be personally liable: (1) when the corporation is not properly formed; (2) for the amount of any unpaid capital contributions that they have committed to make; and (3) when the veil of limited liability is pierced. J. Bauman et al., Corporations Law and Policy, 5th edn. (St. Paul, West Group 2003).
2. U. P. A §§ 13.15 (1914); R.U.P.A. §§ 304, 306 (1997).
3. Compare, e.g., R.E. Meiners, J.S. Mofsky and R.D. Tollison, ‘Piercing the Veil of Limited Liability’, 4 Delaware Journal of Corporate Law (1979) p. 351, at p. 364 (arguing that the difference in the limited liability default rule between corporations and GPs is insignificant, because the default rule can be altered through a variety of private mechanisms) with, e.g., F.H. Easterbrook and D.R. Fischel, ‘Limited Liability and the Corporation’, 52 University of Chicago Law Review (1985) p. 89, at p. 93 (arguing that ‘the distinctive aspects of the publicly held corporation — delegation of management to a diverse group of agents and risk bearing by those who contribute capital — depend on an institution like limited liability’); H. Manne, ‘Our Two Corporation Systems: Law and Economics’, 53 Virginia Law Review (1967) p. 259 (arguing that the publicly held corporation could not exist without limited liability).
4. See infra text accompanying nn. 23–25.
5. R. U. P. A. § 401(b) (1997) (default rule on profit and losses); R.U.P.A. § 401(f) (1997) (default rule on management responsibilities); R.U.P.A. § 29 (1997) (default rule on partner buyouts). These default rules can be circumvented or ameliorated in several ways. First, and most obviously, the parties can opt for another organizational regime, such as the LLC or corporation. Second, the default rules other than limited liability can be altered through a detailed partnership agreement. Finally, the rule of unlimited liability can be ameliorated through contract and insurance.