Skip to content

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

Ishita is a partner in Meridian Services LLP. She acts on behalf of the LLP and signs a contract with a client, which the LLP's business required. Under the LLP Act, 2008, in this situation, who is bound by the contract?

The LLP is bound by the contract. Under the LLP Act, 2008, each partner is an agent of the LLP, not of the other partners, so an act done in the course of the LLP's business binds the LLP and does not make the other partners personally liable.

  1. AOnly Ishita personally, because she signed it
  2. BThe LLP, because a partner is the agent of the LLP and not of the other partnersCorrect
  3. CAll the partners personally and jointly, as in an ordinary partnership
  4. DThe LLP only if every other partner ratified the contract in writing

Explanation

In an LLP, every partner is an agent of the LLP, but not of the other partners. An act done by a partner in the course of the LLP's business therefore binds the LLP. The option making all partners personally liable reflects the position in an ordinary partnership, which is wrong for an LLP.

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