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

Rohit, a partner in Banyan Consulting LLP, commits a fraudulent act against a client while carrying on the LLP's business, without the knowledge of the other partners. Which statement best reflects the LLP's nature regarding liability?

The other partners are shielded from personal liability for Rohit's independent wrongful act, while Rohit stays personally liable for it. The LLP, as a separate entity, is liable to the extent of its assets for acts done in its business.

  1. AThe other partners are not personally liable for Rohit's wrongful act, though Rohit is personally liable for it and the LLP is liable to the extent of its assetsCorrect
  2. BAll partners are personally liable without limit for Rohit's fraud
  3. COnly the LLP is liable, and Rohit has no personal liability
  4. DNobody is liable since the other partners did not know of the fraud

Explanation

An LLP partner is not personally liable for another partner's independent wrongful acts, but the partner who committed the act remains personally liable. The LLP is liable for acts done in the course of its business. The option making Rohit free of liability is wrong, since a partner is liable for his own wrongful act.

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