Limited Liability of Partners

What are the types of liability under partnership law? How can I limit my liability as a partner?

Answers (2)

Team Legistify

Team Legistify

  • Sector-1, Noida

In general partnerships a partner’s liability is joint and several. That means that he or she is liable individually for all the debts and liabilities of the firm irrespective of their share of the partnership. In this case it is normal for partners to give indemnities to each other so that if a creditor pursues one partner, he or she can then claim their share back from the other partners. It is usual for salaried or fixed equity partners to have indemnities from all the equity owning partners in the firm to protect them. The easiest way to limit your liability as a partner is to incorporate your partnership into a Limited Liability Partnership (LLP) where, as the name implies, your liability will be limited.

Answered on 28 Sep 2018

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LLP is a combination of Pvt LTD company and Partnership deed. In General Partnership all partners have full liability of firms whereas LLP liability is limited to the company only.

E.G. Case 1) General Partnership if firm gets default on payment in such case for recovery can be done from personal assets as well.

Case 2) LLP if firm default then liability is limited to company's assets only. Not on personal assets.

Answered on 02 Jul 2019

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