The Law of Corporations and Other Business Organizations

Chapter Review Answers

1. How do limited liability partnerships differ
from general partnerships?
Limited liability partnerships offer their
partners at least a degree of protection
from personal liability for partnership
obligations.

2. Where in the state statutes is law governing
limited liability partnerships generally
found?
It is within the uniform partnership law
as adopted by each state.

3. In states that follow the UPA 1997, what
information must be included in a statement
of qualification to elect limited liability
partnership statutes?
• The name of the partnership
• The street address of the partnership’s
chief executive office and, if
different, the street address of an office
in the state where the partnership
is formed
• The name and street address of the
partnership’s agent for service of
process (if the partnership does not
have an office within the state where
it is formed)
• A statement that the partnership
elects to be a limited liability partnership
• A deferred effective date, if any

4. Why do some states require limited liability
partnerships to maintain liability insurance?
Some states require limited liability
partnerships to maintain liability insurance
or segregated funds to ensure that
third parties who are wronged by the
limited liability partnership will have
some type of recourse if the LLP itself
has limited assets and the partners have
no personal liability for partnership obligations.

5. What is the difference between partial
shield statutes and full shield statutes?
Partial shield statutes protect partners
from personal liability only from debts
and obligations arising from the misconduct
or wrongdoing of their partners.
Full shield statutes protect partners
from personal liability for all debts and
obligations of the partnership, except
those caused by their own misconduct or
wrongdoing.

6. If a partnership formed in a partial shield
state has a judgment filed against it for a
$10,000 debt arising from the embezzlement
of funds by one partner, who will be
responsible for paying the partnership debt
once the partnership assets have been exhausted?
Only the partner who embezzled the
funds will be responsible.

7. Why might a limited liability limited partnership
be a poor choice of entity for a
business that operates in several states?
Limited liability limited partnerships are
not recognized in all states, and there is a
lot of diversity in the limited liability
partnership statutes in those states
where such law has been adopted.

8. In states that follow the ULPA 2001, how
is an election made to form a limited liability
limited partnership?
Simply by indicating in the limited partnership
certificate that is filed with the
state to form the entity that the limited
partnership elects to be a limited liability
limited partnership.