Presentation on

Liabilities in Partnership
BY
Afrin Farzana
ID: 2019040667

OF
Moriba Baker Yorkville University
Outline
 Liabilities of partners in an unlimited partnership
 Liabilitiesof partners in a limited liability
partnership (LLP)
 Business structure
 Legal issues
 Responsibilities and duties of partners
We Restore is an unlimited partnership with 3
partners: Tom, Dick, and Harry. In the duration of
the partnership business, Harry took on the renewal
of an expensive painting for a client. He conducted
the job carelessly and wrecked the painting beyond
repair. The client warned to indict them for
infringement and violation of deal. Expound the
probable debt of We Restore and Tom, Dick, and
Harry considering that:
(a) the firm is an unlimited partnership; and
(b) the firm is an LLP.
(a) When the partners are in an unlimited liability partnership:
The proprietors of an unlimited partnership have indefinite individual
liability. Every partner is jointly responsible for the accountability of the
business. This implies that the proprietors can be charged as a team. Several
liability is when each partner is responsible solely for his own particular
debts. The partners are often both jointly and severally liable for the
destruction caused by the misconduct of other partners, and hence the
liabilities incurred in the partnership.

The 3 requirements for obligations in a partnership are:

1. each partner is responsible for their deeds.
2. each proprietor is accountable for the activities of their partners.
3. each owner is answerable for the action of the employees of the business.

Thus, according to the rules of unlimited partnerships, all the partners would
be individually jointly and severally liable for Harry’s irresponsibility. Every
of them would be indebted altogether for the careless behavior of Harry.
(b) When partners are in a limited liability partnership (LLP):

A partnership in which some or all partners (conditional to the

judicature) have limited liability is a limited liability partnership
(LLP). No partner is accountable for another’s wrongdoing or
carelessness in an LLP. In some cases, the structure of LLP is
comparable to that of a corporation of shareholders.
Majority of the states enact that LLPs shield their partners from
individual liability resulting from a fellow partner’s (or even
employees’ and other agents’) irresponsibility, blunder, failure,
ineptitude, or misdemeanor.
Therefore, Tom and Dick would not be responsible for the
misbehavior of Harry if their partnership was an LLP, and Harry
would only be liable to the degree of his investment in the company.
 Business Framework

It is best for the business to be formed as a limited partnership,

since every member is participating in separate operations, or
more precisely, taking part in a different work. So, each
partner should be liable only for their own activities and not
held accountable for the misdemeanor or carelessness of their
other partners. For instance, Dick makes a mistake in creating
ornamental pieces and the client presses charges against him.
Legal Issues

Tax litigation
Handling displeased clients who may sue the business
Obtaining copyrights and permits
Securing all necessary licenses
Agreements required
Responsibilities and duties of partners

 Partners’ remunerations
 Addressing separation and disintegration of the partnership
 How to proceed when a partner leaves
 What to do when a new partner joins
 Business-selling approach