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

Zenith Services LLP is sued for Rs 8 lakh on a contract it entered into. Which statement is correct as per the Act's provisions on the LLP's liability?

The obligation is solely the LLP's, and it is met out of the LLP's property. The Act says an LLP's obligation, whether arising in contract or otherwise, is solely its own, so partners are not personally liable for it merely because they are partners.

  1. AThe obligation is solely that of the LLP, and it is met out of the LLP's propertyCorrect
  2. BEach partner is personally liable for the full sum from personal assets
  3. COnly the partner who signed is liable, and the LLP is not
  4. DThe obligation is shared equally by the partners regardless of LLP assets

Explanation

Section 27(3) states an obligation of the LLP, whether in contract or otherwise, is solely the obligation of the LLP, and 27(4) says liabilities are met out of LLP property. Options suggesting personal liability of partners for the LLP's contract contradict this.

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