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Partnership Law - Essay Example
Author : nicklaus33
Pages 12 (3012 words)
The fundamental difference between a partnership, a LLP and a private limited company is that in the former, a partner is exposed to a potential liability for all the debts and obligations of the firm"
The scope of this paper is to examine how a partnership differs from other forms of organisations like limited liability partnership and private limited company in terms of liability fastened to the shares held by individuals or entities.
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. ...