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IAI Actuarial Core Principles · Business Management · Separate legal personality, directors' duties, shareholders and partnerships

Meera, Nikhil and Omkar are partners in an actuarial advisory LLP registered under the Limited Liability Partnership Act, 2008. Nikhil, acting within his authority, gives negligent advice to a client, causing a loss that exceeds the LLP's assets. Omkar had no part in the engagement and no knowledge of it. Which statement best describes the position?

The LLP itself is liable from its own assets, and Omkar is not personally liable for Nikhil's wrongful act because a partner is an agent of the LLP and not of the other partners. Nikhil may still be personally liable for his own negligent conduct.

  1. AOmkar is personally liable for the whole loss, because all partners are agents of each other
  2. BMeera and Omkar are personally liable equally, but Nikhil is protected as he acted as the LLP's agent
  3. CThe LLP is liable with its own assets; Omkar is not personally liable for Nikhil's wrongful act, although Nikhil may be liable for his own conductCorrect
  4. DThe LLP has no liability because only individuals can be sued for negligence
  5. The claim fails because an LLP cannot provide professional advice

Explanation

An LLP is a body corporate with separate legal personality. A partner is the LLP's agent, not the agent of other partners, so Omkar is not liable for Nikhil's independent wrongful act. Nikhil remains personally exposed for his own negligence. Option 0 describes the position in an ordinary partnership.

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