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

Meridian Foods LLP, registered in Indore, signs a contract with a supplier in its own name. Which statement about the legal position of the LLP is correct?

An LLP is a body corporate with a legal personality separate from its partners, so it can contract, own property, sue and be sued in its own name. The idea that only partners can contract personally describes an ordinary partnership firm, not an LLP.

  1. AThe LLP is a separate legal entity and can enter into contracts in its own nameCorrect
  2. BThe LLP cannot contract; only its partners can contract personally
  3. CThe LLP is merely a group of partners with no existence apart from them
  4. DThe LLP can contract only if all partners sign the contract personally

Explanation

An LLP is a body corporate and a legal entity separate from its partners. Hence it can enter into contracts and hold property in its own name. The options denying separate existence reflect the position of an ordinary partnership firm, not an LLP.

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