ACCA Applied Skills · Corporate and Business Law (Global) · Partnerships
Dunmore LLP is a limited liability partnership with four members. It owes a supplier $90,000 and cannot pay. Which statement best describes the position of the members under the usual LLP rules?
The LLP, as a separate legal person, is liable for the debt. Its members are generally protected from personal liability beyond their agreed contribution. Joint and several unlimited liability belongs to ordinary partnerships, not LLPs.
- AEach member is personally liable for the full $90,000 jointly and severally
- BThe LLP is a separate legal person and is liable; members' personal assets are generally protected beyond their agreed contributionCorrect
- COnly the member who ordered the goods is liable, and the LLP is not
- DThe supplier can claim only against the member with the largest share of profits
Explanation
An LLP has separate legal personality, so it contracts and is liable in its own name. Members' liability is generally limited to what they have agreed to contribute, unlike in an ordinary partnership. Joint and several personal liability is the feature of general partnerships, which is why the first option is wrong.
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