Question 4 OR (a)

LLP as a hybrid of a company and a partnership firm

5 marks

Time to write
About 10 minutes

From an older CBCS paper

Question

Question 4 OR (a) · 5 marks

Between a company and a partnership firm, LLP is a hybrid. Discuss.

Reworded from the university paper; the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.

Before you write

Read off the question and its marks

10 minfor 5 marks

Read from the question

  • DiscussA statement to explain: say what it means first, then build the answer around it.

Write it in this order

  1. Read; underline the asks; jot your points 1 min
  2. 1 Corporate features 2½ marks 4 min
  3. 2 Partnership features 2½ marks 4 min
  4. Check: every ask answered, key terms underlined 1 min

Short on time? Trim steps 1 and 2 evenly rather than skip one: each is capped at its own marks.

Try it first. About 10 minutes for 5 marks. Write it out, then open the solution.

Solution

Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.

Discussion. The statement is correct. An LLP is a corporate business form that combines a company's limited liability with a partnership's flexibility, as an alternative to both.

Picture itLLP as a hybrid of a company and a partnership firm

1The firm's debt reaches the house: the sofa and the TV ride away on the creditor's truck.

Partnership firmUnlimited, extending to the partners' personal assets.

2Under an LLP only the office desk goes; the couple watch from their own gate, home untouched.

LLPLimited to the agreed contribution, except in wilful fraud.

Features of a company:

  1. It is a body corporate and a legal entity separate from its partners, with perpetual succession.
  2. Its partners' liability is limited to their agreed contribution.

Features of a partnership:

  1. Its internal structure is governed by an agreement among the partners, as in a firm, rather than by articles of a company.
  2. It is flexible to organise and operate, without the elaborate statutory requirements of a company.
  3. Unlike a firm, however, no partner is liable for another's independent or unauthorised acts, and each partner is an agent of the LLP, not of the other partners.

Where the 5 marks sit

#ComponentMarks
1Corporate features2.5
2Partnership features2.5
Total5
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