Extent of liability of partners in an LLP

(i) Extent of liability of partners in an LLP. An LLP is a legal entity separate from its partners and is liable to the full extent of its assets; its creditors are the creditors of the LLP alone, and no partner is personally liable for the LLP's obligations merely because he is a partner (s. 28(1)). What a partner stands to lose is fixed in advance: the contribution he agreed to bring in, whether money, property or services. And because each partner acts as the LLP's agent, not as the agent of his fellow partners, one partner's unauthorised dealings do not make the others answerable.

Exception: a partner's own wrong (s. 28(2)). Limited liability does not shield a partner from the consequences of his own wrongful act or omission: for that he remains personally liable, without the cap of his contribution. He is never personally liable, however, for another partner's wrongful act or omission. Example: if one partner of a consultancy LLP negligently certifies false accounts, a client may sue that partner personally as well as the LLP, but not his colleagues.

Exception: fraud. The shield falls away where the LLP or a partner acts to cheat the LLP's creditors or anyone else, or for any other fraudulent purpose. The partners who took part with that intent then answer without limit for any or all of the LLP's debts and liabilities, and so does the LLP; but where the act was a partner's, the LLP escapes that equal liability if it shows the act was done without its knowledge or authority (s. 30(1)).