Skip to content

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

Dev and Esha are partners in Zenith LLP. Dev, acting within his authority, fraudulently induces a supplier to deliver goods by false statements. The supplier sues. Esha, who was unaware of the fraud, claims she is not liable at all. Which is the correct position under the LLP Act, 2008?

The LLP is liable for Dev's wrongful act done in the course of its business, and Dev is personally liable for his own fraud. Esha is not personally liable for another partner's act done without her knowledge or authority, since partners are not liable for each other's independent acts.

  1. AEsha is personally liable for Dev's fraud since all partners are jointly liable
  2. BZenith LLP is liable to the same extent as Dev, but the LLP's liability is not charged on Esha personally for Dev's wrongful act; Dev is personally liable for his own fraudCorrect
  3. CZenith LLP is not liable because fraud is outside the LLP's business
  4. DOnly Dev is liable, and the LLP has no liability since the fraud is a personal offence

Explanation

An LLP is liable for a wrongful act of a partner done in the course of its business or with its authority. A partner is not personally liable for another partner's independent or unauthorised act. Where the act is done with intent to defraud, the partner and the LLP are liable to the same extent. So Dev is personally liable and the LLP is also liable, while Esha is not personally liable.

Did you get it right without looking?

One question tells you little. A timed set on The Limited Liability Partnership Act, 2008 shows your real accuracy, how long you take and where you lose marks.

Practise The Limited Liability Partnership Act, 2008Free diagnostic mock

More The Limited Liability Partnership Act, 2008 questions