Explain the Limited Liability Partnerships

Question

Explain the Limited Liability Partnerships (LLP)?

Answer 1

A limited liability partnership (LLP) is a special form of partnership for certain professions, such as lawyers and accountants. Individual partners are not personally liable for the professional negligence of their partners or for certain other obligations provided certain requirements are met. A partner remains liable for his own negligence and for that of people under the partner’s direct supervision or control. The firm itself also remains liable. Therefore, a non-negligent partner may still lose the entire value of his partnership share but will not lose personal assets.

In Ontario, the protection of non-negligent partners from personal liability extends only to negligence; it does not apply to other torts, breaches of trust, or contractual obligations. By contrast, legislation in other provinces provides broader protection. For example, in Alberta, a member of an LLP is not liable for the “negligence, wrongful acts or omissions, malpractice, or misconduct” of a partner, or of an employee or agent of the firm, unless that partner knew of the act and did not take reasonable steps to prevent it or unless the act was committed by a direct report over whom he failed to provide adequate supervision. Saskatchewan holds only partners in an LLP personally liable for obligations that a director would have. New Brunswick and Nova Scotia adopt both approaches.