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

Mehta & Rao LLP, registered in Mumbai, enters into a contract to supply software services to Zenith Corp. Which statement about the LLP's legal status is correct?

An LLP is a body corporate with a legal personality separate from its partners, from the date of incorporation. Hence it can enter contracts in its own name, own property and sue or be sued, without any waiting period or need for every partner to sign personally.

  1. AIt is a body corporate with a legal existence separate from its partners, and can contract in its own nameCorrect
  2. BIt has no separate legal existence and the partners together are treated as one entity only
  3. CIt can contract only if all partners sign personally as individual parties
  4. DIt becomes a separate legal person only after it has completed three years of operation

Explanation

An LLP is a body corporate formed and incorporated under the LLP Act, 2008, and is a legal entity separate from its partners. It therefore has the capacity to contract in its own name from incorporation. The option about three years is wrong because separate personality begins on incorporation, not after any waiting period.

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