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CA Foundation · Business Laws · The Limited Liability Partnership Act, 2008

Anita and Vikram are partners in Zenith Software LLP. Vikram, acting within his authority, deals fraudulently with a client without Anita's knowledge, causing the client a loss of ₹4,00,000. Which statement about liability is correct?

The LLP is liable for the partner's wrongful act in the course of business, and Vikram is personally liable for his own act. Anita is not personally liable merely because she is a partner, since an LLP partner is not answerable for another partner's independent conduct.

  1. AAnita is personally liable for the loss because she is a partner, jointly with Vikram
  2. BThe LLP is liable, and Vikram is personally liable for his own wrongful act, but Anita is not personally liable merely for being a partnerCorrect
  3. CNeither the LLP nor Vikram is liable, as the client dealt with a body corporate
  4. DOnly Anita is liable, since she holds the larger share of the capital

Explanation

A partner is not personally liable for another partner's wrongful act or omission, which is a key LLP feature. The LLP is liable for wrongful acts of a partner done in the course of its business, and the wrongdoer partner is liable for his own act. Option A describes the unlimited joint liability of a traditional firm, so it is wrong here. Anita remains exposed only to the extent of her agreed contribution.

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