How should an LLP agreement be drafted?
Limited liability is not possible under a partnership agreement, since under partnership law each partner is jointly and severally liable for the debts and obligations of the partnership incurred while he or she is a partner. Consequently, if a partner runs off with the client's funds, each partner is legally responsible for the entire debt, not just a portion. By introducing the Limited Liability Partnership (LLP), this gap is filled, as the LLP is a response to the need for large partnerships to find a form of incorporation with limited liability in an increasingly litigious world that still provided the same tax advantages as ordinary partnerships and internal management flexibility. A Limited Liability Partnership is a set of rules that govern commercial transactions in the Western world, and these commercial transactions stimulated the creation of law and the legal system. LLPs are governed by the LLP Act, 2008, and its Rules. Throughout this blog, you will learn how LLP agre...