2.0 What is a Limited Liability Partnership?
New Brunswick has legislation governing general partnerships.
The Partnership Act has provisions regarding the nature of a partnership,
the legal relation of partners to each other and to third parties and
the dissolution of a partnership. The Act is very similar to those
in other Canadian jurisdictions. A partnership is not a legal entity separate
from its partners. Along with the assets of the partnership being available
to satisfy debts and liabilities of the partnership, each partner is liable
to the full extent of his personal assets for debts and liabilities of
the partnership business as provided in the Partnership Act.1
The distinguishing characteristic of a LLP from a general
partnership is that in an action regarding the negligence or wrongful
act of a partner, a plaintiff can enforce a judgment against only the
partnership assets and the personal assets of the negligent partner2.
The personal assets of the non-negligent partners are not available to
satisfy the judgment. LLP legislation with this characteristic is referred
to as the "partial shield" model. Such legislation also addresses
the issue as to whether a partner will be personally liable for the actions
of an employee of partnership.
Some jurisdictions have further broadened the "shield" so that the personal assets of partners are not available to satisfy ordinary trade debts and liabilities of the partnership. The assets of the partnership will still be available to satisfy a judgment against the partnership. This type of LLP legislation is referred to as the "full shield" model.
Return to Table of Contents