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CMA Intermediate · Financial Accounting · Accounting of Limited Liability Partnership

Under the LLP Act, 2008, the obligations of an LLP, whether arising in contract or otherwise, are:

An LLP's obligations, whether contractual or otherwise, are solely its own, and its liabilities are met out of the LLP's property. The partners are not personally liable merely because they are partners, unlike partners in a general partnership firm.

  1. ASolely the obligation of the LLP, met out of the LLP's propertyCorrect
  2. BShared jointly and severally by all partners personally
  3. CBorne by the partner who signed the contract, up to his capital contribution
  4. DBorne by the designated partners only, beyond the LLP's property

Explanation

The Act says an LLP's obligation, in contract or otherwise, is solely the obligation of the LLP, and its liabilities are met out of the LLP's property. This separates it from a general partnership with joint and several personal liability. The other options attribute the liability to partners, which contradicts the rule.

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