National Occupational Competency Testing Institute (NOCTI) Business Practice Exam

In a limited liability partnership, what is a key feature?

1. Partners have personal liability for each other's negligence

2. All partners have equal say in management

3. Partners usually have no personal liability for other partners’ negligence

4. Only one partner manages the operations

The correct answer is: Partners usually have no personal liability for other partners’ negligence

In a limited liability partnership (LLP), a key feature is that partners usually have no personal liability for other partners’ negligence. This means that if one partner commits a negligent act or faces legal action, the personal assets of the other partners are generally protected from being used to satisfy any judgments or debts resulting from that act. This characteristic is essential for encouraging collaboration among professionals, as it allows them to work together without the fear of personal financial repercussions due to the actions of their partners. This limited liability structure allows partners to participate in the management of the firm while still enjoying protection from personal liability that is more typically seen in other business structures, such as general partnerships. Additionally, the other options do not accurately describe the LLP framework, with personal liability for each other's negligence not being a feature of this type of partnership, management structure varying among LLPs, and the possibility of multiple partners managing operations as opposed to a single partner handling everything.