Corporate and Other Laws · The Limited Liability Partnership Act, 2008

LLP Agreement and Contributions (CA Intermediate Law)

Updated 4 October 2026 · Fact-checked

The LLP agreement is the contract that sets the mutual rights and duties of partners, and of the LLP and its partners (section 23). It is filed with the Registrar. If it is silent on a matter, the First Schedule applies. Contributions follow the agreement (section 33) and may be in any form (section 32).

Understand LLP Agreement and Contributions

An LLP is run by contract. The LLP agreement is the document that says who does what, who gets what, and what each partner owes. Section 23(1) says that, save as otherwise provided by the Act, the mutual rights and duties of partners, and of the LLP and its partners, are governed by this agreement.

The agreement and any change to it must be filed with the Registrar in the prescribed form and manner, with the prescribed fee (section 23(2)). Students often search for this as "Form 3". The Act itself does not name the form; it leaves form, manner and fee to the rules (section 79(2)(n)). Write "in the prescribed form" in your answer, and add Form 3 only as the form commonly used in practice.

The agreement can even be made before incorporation. A written agreement between the persons who subscribe their names to the incorporation document may impose obligations on the LLP, but only if all the partners ratify it after incorporation (section 23(3)).

What if the agreement says nothing on a matter? Section 23(4) fills the gap: the mutual rights and duties are decided by the provisions on that matter in the First Schedule. So the First Schedule is a default rulebook. The agreement comes first. The Schedule applies only where the agreement is absent or silent.

Contributions are the value partners put in. Under section 32(1), a contribution can be tangible, movable or immovable, or intangible property, or any other benefit. It includes money, promissory notes, agreements to contribute cash or property, and contracts for services performed or to be performed. Under section 33(1), the obligation to contribute is as per the LLP agreement. Section 32(2) requires the monetary value of each partner's contribution to be accounted for and disclosed in the LLP's accounts in the prescribed manner.

Key rules to remember

Governing rule (section 23(1)): Mutual rights and duties = as per LLP agreement (save as otherwise provided by the Act); Covers partner-to-partner and LLP-to-partner rights and duties.
Filing (section 23(2)): LLP agreement + every change → file with Registrar (prescribed form, manner, fees); Changes must be filed too, not just the original agreement.
Pre-incorporation agreement (section 23(3)): Written agreement before incorporation binds the LLP only if ratified by all partners after incorporation; Ratification must be by all partners, not a majority.
No agreement (section 23(4)): No agreement on a matter → First Schedule provisions apply; Applies matter by matter, so it also covers silence on a point.
Form of contribution (section 32(1)): Contribution = tangible, movable, immovable or intangible property or other benefit, including money, promissory notes, agreements to contribute and contracts for services; Services, even future services, can be a contribution.
Accounting of contribution (section 32(2)): Monetary value of each partner's contribution → accounted for and disclosed in the LLP's accounts as prescribed; Value must be shown in money terms.
Obligation to contribute (section 33): Obligation = as per LLP agreement; creditor who relied on it, without notice of compromise, may enforce the original obligation; A private compromise among partners does not defeat such a creditor.

How to solve LLP Agreement and Contributions questions

Use this method for any question on the LLP agreement or contributions. It keeps your answer in the provision, facts, conclusion format.

1Identify the issue: is it about the agreement's authority, filing, pre-incorporation agreement, absence of agreement, or contribution?
2State the rule with its section: 23(1) for governing effect, 23(2) for filing, 23(3) for pre-incorporation, 23(4) for default rules, 32 and 33 for contributions.
3Check the facts for an agreement. Is there one? Is it silent on the point asked? Was it made before incorporation?
4For a pre-incorporation agreement, check whether all partners ratified it after incorporation.
5If there is no agreement on the point, apply the First Schedule. Do not quote its detailed content unless you are sure of it.
6For contributions, check the form (money, property, services) and whether the agreement fixes the obligation. For a creditor, check reliance and absence of notice of compromise.
7Write a one-line conclusion that answers the exact question asked.

Quickest way: Four-link check for MCQs and written answers

When to use it: Use it when time is short and the question names a situation without citing a section.

Agreement exists → it governs. Agreement silent or absent → First Schedule.
Pre-incorporation agreement → binding on LLP only with ratification by all partners.
Contribution → can be money, property, benefit or services; obligation as per the agreement.
MCQ elimination: reject any option saying majority ratification, or saying the Companies Act governs the gap. For written answers, use three lines: provision, facts, conclusion, and cite the section number in the first line to earn step marks.

Common mistakes in LLP Agreement and Contributions

Saying the Indian Partnership Act, 1932 fills gaps when there is no LLP agreement.
Students treat an LLP as an ordinary partnership.
Fix: Under section 23(4) the gap is filled by the First Schedule to the LLP Act.
Saying only the original agreement must be filed.
Students read section 23(2) quickly.
Fix: The agreement and any changes made in it must be filed with the Registrar.
Saying a pre-incorporation agreement binds the LLP automatically.
Students overlook the ratification condition.
Fix: It imposes obligations on the LLP only if all partners ratify it after incorporation.
Thinking contribution must be in cash.
Everyday meaning of contribution is money.
Fix: Section 32(1) allows property, other benefits, promissory notes, agreements to contribute and contracts for services.
Quoting Form 3 as written in the Act.
Coaching shorthand is mistaken for statute.
Fix: The Act says form, manner and fees are prescribed. Write 'prescribed form' and mention Form 3 only as the commonly used form.
Saying a compromise between partners frees a partner from the original obligation against all creditors.
Students ignore section 33(2).
Fix: A creditor who extended credit relying on the agreement's obligation, without notice of the compromise, may enforce the original obligation.

Worked examples

Example 1

Three persons subscribe to the incorporation document of an LLP. Before incorporation they sign a written agreement that the LLP will pay one of them a fixed monthly fee for services. After incorporation, only two of the three partners approve it. Can the agreement impose this obligation on the LLP?

Show the solution

Provision: Under section 23(3), a written agreement made before incorporation between the persons who subscribe their names to the incorporation document may impose obligations on the LLP, provided it is ratified by all the partners after incorporation.
Facts: The agreement is in writing and made by the subscribers before incorporation. After incorporation, only two of three partners approved it.
Application: The condition is ratification by all the partners. Approval by two of three is not ratification by all.
Conclusion: The agreement cannot impose the obligation on the LLP unless the third partner also ratifies it.

Answer: No. Section 23(3) requires ratification by all the partners after incorporation. Two of three is not enough.

Example 2

An LLP has an agreement that deals with profit sharing but says nothing about the rights of partners in management. A dispute arises on management rights. Which rules govern, and what did a partner, Mr. A, who agreed to contribute services, owe?

Show the solution

Provision: Section 23(1) makes the LLP agreement the governing source. Section 23(4) says that in the absence of agreement on any matter, the First Schedule provisions on that matter apply.
Facts: The agreement is silent on management rights, so there is no agreement on that matter.
Application: The management dispute is decided by the relevant First Schedule provisions. Profit sharing remains governed by the agreement.
Contribution: Under section 32(1), a contribution can include contracts for services performed or to be performed. Under section 33(1), Mr. A's obligation is as per the LLP agreement.
Conclusion: The First Schedule fills the management gap, and Mr. A must perform the service contribution as the agreement requires.

Answer: Management rights are decided by the First Schedule under section 23(4). Profit sharing stays under the agreement. Mr. A's obligation to contribute services is as per the agreement (sections 32(1) and 33(1)).

Exam tips

Always open with the section number: 23 for agreement, 32 for form of contribution, 33 for obligation to contribute.
In scenario questions, check two facts first: is there an agreement, and does it cover the point asked? That decides whether the First Schedule applies.
Do not recite First Schedule details unless you are sure. State that its provisions apply and conclude.
For filing questions, write 'prescribed form, manner and fees' and mention that changes must also be filed.
MCQs often test the condition in section 23(3): ratification by all partners after incorporation.

Practice questions from The Limited Liability Partnership Act, 2008

LLP Agreement and Contributions in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

LLP Agreement and Contributions: frequently asked questions

Is an LLP agreement compulsory?

Section 23(1) makes the agreement the main source of partners' rights and duties. If there is no agreement on a matter, section 23(4) applies the First Schedule to that matter. So the LLP can still function on default rules.

Must the LLP agreement be filed with the Registrar?

Yes. Section 23(2) requires the agreement and any changes in it to be filed with the Registrar in the prescribed form and manner, with the prescribed fees.

What can a partner contribute to an LLP?

Under section 32(1), a contribution may be tangible, movable or immovable, or intangible property, or other benefit. It includes money, promissory notes, agreements to contribute cash or property, and contracts for services. The monetary value must be accounted for and disclosed in the accounts as prescribed.

What is the use of section 33(2)?

It protects creditors. If a creditor extended credit or acted relying on a contribution obligation described in the agreement, and had no notice of any compromise between partners, it may enforce the original obligation against that partner.