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

Rohit and Sneha are the only two partners of Vertex Advisory LLP, Hyderabad. An act of Rohit, done in the course of LLP business without Sneha's knowledge, causes a loss to a client. Sneha had no role in it. What is Sneha's position under the LLP Act?

Sneha is not personally liable. In an LLP a partner is the agent of the LLP, not of other partners, so the LLP is liable for Rohit's wrongful act in the course of business, while Sneha is protected from liability for his independent conduct.

  1. ASneha is personally liable for the full loss as Rohit's co-partner
  2. BSneha is not personally liable for Rohit's wrongful act, as a partner is not liable for another partner's independent acts, though the LLP is liableCorrect
  3. CSneha is liable jointly with Rohit because all partners are agents of each other
  4. DNeither the LLP nor Rohit is liable, since Sneha did not authorise the act

Explanation

In an LLP, each partner is the agent of the LLP, not of the other partners. The LLP is liable for the wrongful act of a partner done in the course of business. An unconnected partner is not personally liable for another partner's independent act. Option 3 describes ordinary partnership agency.

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