Chapter V - Extent and Limitation of Liability of Limited Liability Partnership and Partners
Section 27
Section 27: extent of liability of limited liability partnership
The LLP can be bound by partner acts and liable for business wrongful acts under the statutory tests; its own obligations are met from LLP property.
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Need advice on Section 27?
This article is for general information. Refer to the Limited Liability Partnership Act, 2008 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) A limited liability partnership is not bound by anything done by a partner in dealing with a person if— (a) the partner in fact has no authority to act for the limited liability partnership in doing a particular act; and (b) the person knows that he has no authority or does not know or believe him to be a partner of the limited liability partnership.
(2) The limited liability partnership is liable if a partner of a limited liability partnership is liable to any person as a result of a wrongful act or omission on his part in the course of the business of the limited liability partnership or with its authority.
(3) An obligation of the limited liability partnership whether arising in contract or otherwise, shall be solely the obligation of the limited liability partnership.
(4) The liabilities of the limited liability partnership shall be met out of the property of the limited liability partnership.
Key takeaways
Core rule
The LLP can be bound by partner acts and liable for business wrongful acts under the statutory tests; its own obligations are met from LLP property.
Practical step
Test actual authority and third-party knowledge together
How the section operates
The LLP can be bound by partner acts and liable for business wrongful acts under the statutory tests; its own obligations are met from LLP property.
Practical steps
Test actual authority and third-party knowledge together; assess the course of business or LLP authority for a wrongful act; identify LLP property for its obligations.
Practical preparation
Review these items against the Act and LLP records.
- Test actual authority and third-party knowledge together
- Assess the course of business or LLP authority for a wrongful act
- Identify LLP property for its obligations.
Practical checklist
Do
- Test actual authority and third-party knowledge together
- Assess the course of business or LLP authority for a wrongful act
- Identify LLP property for its obligations.
Avoid
- Do not assume LLP status alone settles liability without applying the section's stated conditions.
Illustrative example
Hypothetical: extent of liability of limited liability partnership
Grove LLP's partner signs a contract outside their authority, and the supplier knows of that limit.
Step 1
Check both limbs of section 27(1)
Step 2
Identify any independent wrongful act
Step 3
Determine which obligation, if any, belongs to the LLP.
Outcome
- If both section 27(1) conditions are satisfied, the LLP is not bound by that partner act.
Glossary
- actual authority
- Authority the partner in fact has to do the particular act for the LLP.
Frequently asked questions
What does section 27 provide?
The LLP can be bound by partner acts and liable for business wrongful acts under the statutory tests; its own obligations are met from LLP property.
What should be checked?
Test actual authority and third-party knowledge together; assess the course of business or LLP authority for a wrongful act; identify LLP property for its obligations.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026