Skip to content

CSEET · Business Laws and Management · Elements of Law relating to Partnership and Limited Liability Partnership

Ankit and Bhavna, subscribers to an LLP's incorporation document, signed a written agreement before incorporation that would impose certain obligations on the LLP. After the LLP is incorporated, under what condition can the agreement bind the LLP?

The agreement binds the LLP only if all the partners ratify it after incorporation. Section 23(3) permits a written pre-incorporation agreement between subscribers to impose obligations on the LLP, provided such ratification by all partners takes place after the LLP is incorporated.

  1. AIt binds automatically on incorporation
  2. BIt binds only if ratified by all the partners after incorporationCorrect
  3. CIt binds only if the Registrar approves it
  4. DIt binds if ratified by the designated partners alone

Explanation

Section 23(3) provides that a written pre-incorporation agreement between subscribers may impose obligations on the LLP only if all the partners ratify it after incorporation. Automatic binding is wrong, and ratification by designated partners alone is insufficient since all partners must ratify.

Did you get it right without looking?

One question tells you little. A timed set on Elements of Law relating to Partnership and Limited Liability Partnership shows your real accuracy, how long you take and where you lose marks.

Practise Elements of Law relating to Partnership and Limited Liability PartnershipFree diagnostic mock

More Elements of Law relating to Partnership and Limited Liability Partnership questions