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CMA Intermediate · Business Laws and Ethics · Limited Liability Partnership Act, 2008

Sections 27 and 28 of the LLP Act, 2008 together lead to which of the following conclusions about a contractual debt of an LLP?

A contractual debt of an LLP is solely the obligation of the LLP, and a partner is not personally liable for it merely because he is a partner. Personal liability arises only for a partner's own wrongful act or omission.

  1. AIt is solely the LLP's obligation, and a partner is not personally liable for it solely by reason of being a partnerCorrect
  2. BIt is the joint obligation of the LLP and every partner, enforceable against either
  3. CIt is the obligation of the LLP, but the partner who signed the contract is automatically personally liable for it
  4. DIt is the LLP's obligation, but partners are liable up to their agreed contribution in all cases

Explanation

Section 27(3) says an obligation of the LLP, whether in contract or otherwise, is solely the LLP's obligation. Section 28(1) says a partner is not personally liable for it solely by reason of being a partner. Personal liability arises only for a partner's own wrongful act or omission under section 28(2), not merely from signing for the LLP.

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