CA Foundation · Business Laws · The Limited Liability Partnership Act, 2008
Neelam LLP has three partners. One partner, Dev, carries on a fraudulent act in the LLP's name without the other partners' knowledge. Which feature of an LLP best explains why the other partners are not personally liable for Dev's independent wrongful act?
In an LLP, each partner is the agent of the LLP and not of the other partners. Therefore, other partners are not personally liable for one partner's independent wrongful act done without their authority, unlike an ordinary partnership where partners are agents of each other.
- AEach partner is an agent of the LLP only, not of the other partnersCorrect
- BEach partner is an agent of all other partners
- CEvery partner has unlimited personal liability for the LLP's acts
- DThe LLP has no separate legal existence from its partners
Explanation
In an LLP a partner is an agent of the LLP, not of other partners. So one partner's independent wrongful act does not make the other partners liable. The other options describe ordinary partnership features.
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