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

Rohit and Sana are partners in Zenith Consulting LLP. Sana, acting within her authority, signs a contract with a client. Which statement about the effect of the LLP's nature is correct?

Each partner of an LLP is the agent of the LLP only, not of the other partners. Therefore a contract signed by Sana within her authority binds the LLP. This differs from an ordinary partnership, where partners are mutual agents.

  1. ASana is the principal and the LLP is her agent
  2. BEach partner is the agent of the LLP, not of the other partnersCorrect
  3. CEach partner is the agent of every other partner
  4. DSana alone is bound by the contract, and the LLP is not

Explanation

In an LLP, every partner is an agent of the LLP, but not an agent of other partners. This differs from a general partnership, where partners are agents of one another and of the firm. So the contract binds the LLP, and Rohit is not Sana's principal.

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