Partnership Law Essay Example | Topics and Well Written Essays - 3000 words

Partnership Law - Essay Example Partners' liabilities are differently prescribed in that liability caused by any error of one partner need not affect the other partners. State registration is required but some of the states stipulate that partners should take liability insurance or has adequate assets to meet likely claims. This is very much applicable to firms of professionals like accountants, lawyers, architects. Not all the states recognize them. A partner's interest in an LLP can be assigned to third parties in which the assignee gets only the financial benefit and he can not take part in the management nor can he become a partner. There can be more than two partners. An LLP will stand dissolved on the death of a partner and on filing dissolution deed with the Sate authority. A clear advantage of an LLP is that it need not conduct annual meetings and maintain minutes of meetings though it has the features of a limited company. Profit is not taxable at the hands of the firm but that of the individual partners. One disadvantage is that a partner of an LLP can bind his share without the other partners. ... An LLP name with the above letters can not be registered unless it ends with them. It is an offence to use an LLP's name if the Secretary of State so considers and if the name already exists for an LLP or a registered company. The summary of the act states that main feature of the act is that it offers organisational flexibility and limited liability of the partners.2 The overview of the Act says that an LLP has an unlimited capacity and can act as a separate legal entity as any natural person would. It can contract and own properties and can continue to exist if there is any change in the membership. It implies that any third party can transact with the LLP as an entity unlike in case of traditional partnership where in third party is presumed to deal with the partners jointly and severally. If a partner of LLP is negligent only the firm can be proceeded with and not the individual partner by virtue of limited liability. But in a recent case law 3states that liability by an individu al negligent partner causing economic loss to the clients depends the fact of any specific assumption personal responsibility of the partner concerned and whether the client also relied on the responsibility of the individual partner. Section 4 (1) Companies Act 2006 defines a private limited company as any company which is not a public limited company. Hence in order to understand that, what a public limited company means must be seen. As per section 4(2) of the act, a public limited company whose liability is limited to the extent of its share capital or to the extent of any guarantee where there is no share capital and its certificate of incorporation must state that it is public limited.4 As per section 9 of Partnership Act 1890, partners'