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

In a limited liability partnership, only the partners who were directly involved in the project that caused the damage would face unlimited liability, while the other partners would only risk losing the amount they invested in the firm. The LLP does not protect the partners from all suits by clients, and it may not be easy or cost-effective to reorganize the firm after such a claim.

Kristen and Her Brothers and Sisters Set Up a Design