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

Kavita, a partner in Sapphire Realty LLP, personally commits a fraud against a buyer without the knowledge or authority of the other partners, who are Lalit and Manoj. Which statement about their liability is correct?

Lalit and Manoj are not personally liable for Kavita's unauthorised fraud, while Kavita herself is personally liable for her own wrongful act. An LLP partner is not answerable for another partner's independent misconduct, unlike partners in an ordinary firm.

  1. ALalit and Manoj are jointly and severally liable for Kavita's fraud like partners in an ordinary firm
  2. BLalit and Manoj are not personally liable for Kavita's wrongful act, and Kavita is personally liable for itCorrect
  3. COnly the LLP is liable and Kavita bears no personal liability
  4. DLalit and Manoj become liable only if they are designated partners

Explanation

A partner is not personally liable for the independent, unauthorised acts of another partner. The wrongdoing partner remains personally liable for her own act, and the LLP is liable if she acted in the course of its business. Joint and several liability of all partners is the rule for ordinary firms, not LLPs.

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