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

Rohan and Sana are partners in Mosaic Interiors LLP. The LLP's business activities start to go badly, and a creditor, Mr. Patil, holds an unpaid bill. The LLP has no partner who is a body corporate. Which statement best describes the nature of the LLP's liability and Rohan's position, assuming Rohan committed no fraud or wrongful act?

The LLP is liable for its debts to the full extent of its assets, while Rohan's liability is limited to his agreed contribution. He is not personally liable for the LLP's obligations merely as a partner, because no fraud or wrongful act by him is involved.

  1. AThe LLP is liable for the debt with all its assets, and Rohan's liability is limited to his agreed contributionCorrect
  2. BRohan and Sana are personally liable without limit for the debt of the LLP
  3. CThe LLP has no liability because only the partners can be sued
  4. DThe LLP is liable only up to the amount of its registered capital with the Registrar

Explanation

The LLP is liable for its debts to the full extent of its assets. A partner's liability is limited to his agreed contribution, and he is not personally liable for the LLP's obligations merely by being a partner. Unlimited personal liability applies only for the partner's own wrongful act or fraud, which is excluded here.

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