Ordinary LLP debt is not automatically every partner’s personal debt
Under sections 26–28 of the LLP Act, 2008, a partner acts as agent of the LLP for its business, not as agent of the other partners. LLP obligations are ordinarily met from LLP property; a partner is not personally liable solely because of partner status. The actor’s own wrongful act or omission remains different. This guide, checked on 26 October 2026, focuses on commercial authority and ordinary civil exposure. A personal guarantee, fraud, holding out, contribution obligation, sole-partner continuation or liability under another statute requires separate analysis. LLP Act, 2008 on the Bombay High Court legislation repository: sections 26–30.
The section 27(1) exception has two linked conditions
The LLP is not bound by a partner’s act in dealing with a person if the partner actually lacks authority for that particular act and the counterparty knows of that lack, or does not know or believe the actor to be a partner. Read the conjunction carefully: an undisclosed internal restriction alone does not establish the complete exception. Preserve both the actual authority limit and evidence of the counterparty’s knowledge or belief at the transaction time. Do not turn this into a universal conclusion that every unauthorised contract binds the LLP; all material agency and contract facts remain relevant.
Build authority around the specific commitment
Identify the LLP agreement, delegated powers, partner status, transaction type, monetary limit, amendments and any approval communicated externally. A procurement limit may be per order, cumulative outstanding exposure or total committed expenditure. The agreement’s language decides which calculation is useful. The bank-signatory mandate concerns payment authority and is not conclusive evidence that the underlying purchase was authorised. A later ratification or settlement needs its own legal and documentary analysis.
Separate wrongful conduct from ordinary non-payment
Section 27(2) makes the LLP liable where a partner is liable for a wrongful act or omission in the course of its business or with its authority. Section 28(2) preserves the partner’s personal liability for that partner’s own wrong, while not making another partner personally liable for it. Mere inability of the LLP to pay an ordinary invoice is not, without more, proof that every partner committed a wrong. Conversely, describing an engagement as an LLP contract does not erase the acting partner’s own wrongful conduct.
Use a claim-and-recovery matrix
For each invoice or damages claim, record the debtor asserted, authority facts, wrong alleged, legal route, disputed amount, payment credits and outstanding balance. If two persons may be answerable for the same loss, do not present their exposure as two separate economic losses or ignore a recovery already received. Recoverability, insurance coverage, insolvency priorities and contribution between defendants are separate questions. An agreement to share internal losses does not by itself determine the claimant’s external rights.
Exceptions require their own proof
Section 29 deals with holding out and section 30 with fraud; neither can be inferred merely from a missed payment. Section 6’s deficient partner-number rule and section 33 contribution obligations also operate on their own facts. This article does not decide those routes. Avoid the opposite oversimplification that all personal exposure is capped at the capital account: own wrongdoing, an enforceable guarantee or an independently applicable statute may require a different result.
A practical supplier-onboarding control
Obtain the LLP’s exact identity and the person’s stated capacity before giving credit. For unusual or high-value commitments, request relevant authority and record restrictions actually received. An internal delegation register should also show when counterparties were notified of a change. Once a dispute arises, preserve contemporaneous communications rather than editing the approval record retrospectively. The illustrative amounts below measure commitments and unpaid balances, not statutory damages tariffs or automatic court awards.
Applicable primary references
LLP Act, 2008 on the Bombay High Court legislation repository: sections 26–30 Gazette text of the LLP (Amendment) Act, 2021; amendment cross-check
Six worked illustrations
All facts and amounts below are fictional. Assumptions describe the model, not additional statutory rules.
Illustrative example 1: Ordinary unpaid invoice
The LLP validly orders goods for ₹9,00,000 and pays ₹3,50,000. The unpaid contractual amount is ₹5,50,000. Assuming no guarantee, own wrong or separate statutory route, partner status alone does not allocate that balance personally among three partners at ₹1,83,333.33 each.
Illustrative example 2: Known authority limit
A partner’s actual per-order authority is ₹2,00,000, and the supplier demonstrably knows that limit. The partner nevertheless orders ₹3,20,000 without approval: the order exceeds the limit by ₹1,20,000. Assuming the section 27(1) conditions are established, assess whether the LLP is unbound by that act. Do not assume the exception merely reduces the invoice by the excess or automatically validates its first ₹2,00,000.
Illustrative example 3: Undisclosed internal restriction
The internal limit is ₹2,00,000 and an order is ₹3,20,000, again an excess of ₹1,20,000. This time the supplier knows and believes the actor to be a partner but has no knowledge of the restriction. The amount is the same, yet the stated section 27(1) knowledge condition is not established. Investigate the contract and agency facts rather than claiming the internal excess alone defeats the supplier.
Illustrative example 4: Own wrongful act and one loss
Assume established business-related wrongdoing by Partner A causes a verified ₹4,80,000 loss, attracting sections 27(2) and 28(2). A valid recovery of ₹1,30,000 against that same loss leaves ₹3,50,000 unrecovered, before interest or other legally established items. Do not book ₹9,60,000 as two independent losses because claims involve both A and the LLP; Partner B’s mere status does not establish B’s personal liability.
Illustrative example 5: Cumulative delegation control
An authority expressly caps outstanding commitments at ₹8,00,000. Existing commitments are ₹5,40,000, leaving ₹2,60,000. A new ₹3,00,000 order would produce ₹8,40,000 outstanding, exceeding the internal cap by ₹40,000. That control exception needs approval and external-knowledge analysis; the arithmetic alone does not settle the supplier’s legal rights.
Illustrative example 6: Separate guarantee register
An LLP debt is ₹12,00,000 and the creditor has received ₹4,00,000, leaving ₹8,00,000. A partner’s separately enforceable guarantee is assumed to cover up to ₹6,00,000 of that same unpaid principal. Its possible covered amount is min(₹8,00,000, ₹6,00,000) = ₹6,00,000 under the assumed terms, with ₹2,00,000 above the guarantee cap. The guarantee is an independent contract, not a consequence imposed by section 28 solely for being a partner.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Identify the LLP and transaction | Incorporation identity, counterparty and original contract. |
| 2 | Confirm actor and capacity | Partner status and representations at commitment time. |
| 3 | Read actual authority | LLP agreement, delegation and relevant approval. |
| 4 | Interpret the monetary limit | Per-order, aggregate commitment or outstanding basis. |
| 5 | Establish counterparty knowledge | Communicated restrictions, acknowledgments and correspondence. |
| 6 | Apply both section 27(1) conditions | Actual lack of authority plus the statutory knowledge/belief condition. |
| 7 | Identify any own wrongful conduct | Actor, act/omission, business nexus, causation and loss evidence. |
| 8 | Separate independent exposure routes | Guarantee, holding out, fraud and other applicable statutory claims. |
| 9 | Reconcile one loss to actual recoveries | Principal, damages, payments and separately supported additions. |
| 10 | Record a qualified liability conclusion | Disputed facts, preserved evidence, decision owner and next legal step. |
Sixteen practitioner FAQs
1. Is a partner the agent of every other partner?
No. Section 26 identifies the partner as agent of the LLP for its business, not of other partners.
2. Does every LLP invoice create personal partner liability?
No. Section 28(1) rejects liability based solely on being a partner.
3. What property ordinarily meets LLP liabilities?
Section 27(4) identifies the LLP’s property.
4. Does an internal authority limit alone defeat a supplier?
It does not establish the complete section 27(1) exception; counterparty knowledge or belief also matters.
5. Must the particular act be outside actual authority?
Yes. Identify the act and actual authority rather than merely asserting that an approval was desirable.
6. What counterparty evidence is relevant?
Communicated limits, capacity statements, acknowledged terms and contemporaneous transaction communications.
7. Does a payment mandate prove purchasing authority?
Not conclusively. Payment permission and authority to incur the commitment may be different.
8. Is only the excess over a delegation limit invalid?
Do not assume that result. Section 27(1) refers to the act; contract-specific analysis is required.
9. Can the LLP be liable for a partner’s wrongful act?
Section 27(2) applies where its liability, business-course or authority conditions are met.
10. Is the acting partner protected from that partner’s own wrong?
No. Section 28(2) preserves personal liability for that partner’s own wrongful act or omission.
11. Is an uninvolved partner automatically liable for another partner’s wrong?
Section 28(2) does not impose that personal liability merely from the other partner’s conduct.
12. Does limited liability mean a universal capital-account cap?
No. Independently established guarantees, own wrongdoing or other applicable legal routes need separate examination.
13. Does non-payment itself establish fraud?
No. Fraud requires its own facts and statutory analysis.
14. Can a personal guarantee still matter?
Yes. Its enforceability, terms, covered debt and cap are a separate contractual enquiry.
15. Should the same loss be counted once for each defendant?
No. Reconcile the underlying loss and actual recoveries without manufacturing duplicate economic loss.
16. Does this guide settle designated-partner filing penalties?
No. It concerns sections 26–28 commercial authority and civil liability; other statutory duties require separate review.
Conclusion
Assess LLP authority, counterparty knowledge and the actor’s own conduct before allocating a supplier or damages claim between the LLP and individual partners.