A form of partnership limiting each partner's personal liability for acts or omissions of other partners.

• A. Limited liability partnership
• B. Limited partnership
• C. Partnership
• D. Common name statute

Answer: (D)

In a partnership, the key issue is how liability for the actions of other partners is handled. The form that provides protection so that a partner isn’t personally liable for the acts or omissions of other partners is the limited liability partnership. In an LLP, each partner’s personal liability is limited to their own misconduct or the partnership’s own debts, and they aren’t personally responsible for the negligence or wrongdoing of their partners. This structure preserves the partnership’s ability to operate with pass-through taxation in many cases, while offering a shield against the financial impact of a partner’s mistakes.

A general or ordinary partnership exposes all partners to joint and several liability for the debts and actions of the partnership and of the other partners, so personal risk is not limited in that way. A limited partnership has general partners with unlimited liability and limited partners whose liability is capped at their investment, but limited partners typically do not have protection from the general partners’ actions. A common name statute deals with using an assumed or “doing business as” name and does not address liability among partners at all.