Question 5 (b)
How an LLP differs from a traditional partnership firm
7 marks
- Time to write
- About 14 minutes
From an older CBCS paper
Question
Question 5 (b) · 7 marksHow is LLP different from traditional partnership firm?
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
Read from the question
- How is LLP differentSet the differences out in a table, basis by basis, not as two separate essays.
Write it in this order
- Read; underline the asks; jot your points 1 min
- 1 Points of difference 7 marks 12 min
- Check: every ask answered, key terms underlined 1 min
Try it first. About 14 minutes for 7 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.
Differences between a partnership firm (Indian Partnership Act, 1932) and an LLP (LLP Act, 2008):
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 | Existence continues despite changes in partners | 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 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 |
| Annual filing | Statement of account and solvency, and annual return | No annual documents to be filed with the Registrar of Firms |
Where the 7 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Points of difference | 7 |
| Total | 7 |
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