Kristen and her brothers and sisters set up a design firm called Houses by Design LLP. Although key business functions are centralized, each sibling is a licensed architect that designs, builds, and installs residential and commercial buildings for his/her own clients. Unfortunately, a design created and installed for one of their clients resulted in water damage to the basement of the client's new home. The limited liability partnership:
A) guarantees that none of the company's partners will lose more than the amount they invested in the company.
B) guarantees that only those partners who were directly involved in designing and building this home face unlimited liability for claims against the firm.
C) protects the partners from any suit by the client.
D) will enable the firm to quickly reorganize with only minor financial losses.

Question

Quizplus · Accepted Answer

As a limited liability partnership, the partners are shielded from personal liability for the actions of their fellow partners. However, in this scenario, the partners involved in the design and construction of the specific building may face unlimited liability for any claims against the firm related to that building. The other partners would not be personally liable.

Kristen and Her Brothers and Sisters Set Up a Design