Question 4 OR (c)

Partnership firm and LLP distinguished

6 marks

Question

Question 4 OR (c) · 6 marks

Differentiate between the partnership firm and LLP.

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

Read off the question and its marks

12 minfor 6 marks

Differentiate betweenSet the differences out in a table, basis by basis, not as two separate essays.

Read; underline the asks; jot your points 1 min
1 Status, registration, succession, name 3 marks 5 min
2 Liability, agency, designated partners, seal, compliance, filing 3 marks 5 min
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 12 minutes for 6 marks. Write it out, then open the solution.

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

Differences between a partnership firm (Indian Partnership Act, 1932) and an LLP (LLP Act, 2008):

Picture itPartnership firm and LLP distinguished

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.

Basis	LLP	Partnership firm
Governing law	LLP Act, 2008	Indian Partnership Act, 1932
Legal status	A body corporate, separate from its partners	Not a separate legal entity
Registration	Compulsory	Optional
Perpetual succession	Partners may join or leave but its existence continues	Change of partners may affect its existence
Name	Must end with "limited liability partnership" or "LLP"	No such requirement
Liability	Limited to the agreed contribution, except in wilful fraud	Unlimited, extending to the partners' personal assets
Mutual agency	Each partner binds the LLP but not the other partners	Each partner binds the firm and the other partners
Designated partners	At least two, one resident in India	No such concept
Common seal	May have one	No such concept
Compliance	Designated partners are responsible	All partners are responsible
Annual filing	Statement of account and solvency, and annual return	No annual filing with the Registrar

#	Component	Marks
1	Status, registration, succession, name	3
2	Liability, agency, designated partners, seal, compliance, filing	3
	Total	6

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