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

Neha and Omkar registered Bluewave Consulting LLP in Mumbai. A vendor argues that the LLP cannot enter into a contract or own a laptop in its own name because it is only a group of two people. Which statement about the legal status of an LLP is correct?

An LLP is a body corporate and a separate legal entity distinct from its partners. Because of this separate legal personality, it can enter contracts, own property and sue or be sued in its own name, unlike an ordinary partnership firm, which has no separate existence.

  1. AAn LLP is a body corporate with a legal personality separate from its partners, so it can contract and hold property in its own nameCorrect
  2. BAn LLP has no separate existence and its partners must sign and own property in their personal names
  3. CAn LLP can hold property only if every partner is also a company director
  4. DAn LLP can contract only after it obtains a licence from the Supreme Court

Explanation

Under the LLP Act, 2008, an LLP is a body corporate formed and incorporated under the Act and is a legal entity separate from its partners. It can therefore enter into contracts and own property in its own name. The option denying separate existence describes an ordinary partnership, not an LLP.

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