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

Kartik, a partner in Vertex Services LLP, acts in dealings with a customer without any authority from the LLP, and the customer knows he has no authority. The LLP did not ratify his act. Which statement is correct?

The LLP is not bound by Kartik's unauthorised act, because the customer knew he lacked authority. Kartik is personally liable for it. The other partners are not liable for his independent act, since a partner's agency is for the LLP only.

  1. AThe LLP is bound, because every partner is its agent
  2. BThe LLP is not bound by the act, and Kartik remains personally liable for itCorrect
  3. CThe other partners become personally liable for the act
  4. DThe act binds the LLP only if Kartik is a designated partner

Explanation

An LLP is not bound by a partner's act done without authority where the other party knows the partner has no authority. The agency of a partner does not extend to such acts. Kartik's own liability for his unauthorised act remains, and other partners are not personally liable for his wrongful act.

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