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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.

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