Question 1

“Minor are unable to enter valid contracts.”

According to law, the term minor is used to describe a person who is under the
age in which one lawfully assumes adulthood and is legally granted rights as an adult in
the society. The age may vary according to jurisdiction and application but it is usually
set at either 18 or 21. As the law stands, it is generally acknowledged that minors cannot
make contracts. However, there are circumstances and exceptions a contract can be
legally binding with a minor. The general presumption of the law is that all people have a
capacity to contract. A person who is trying to avoid a contract would have to plead his or
her lack of capacity to contract against the party who is trying to enforce the contract.
Most contracts voidable on capacity grounds are minor’s contract. A minor or infant is a
person who has not yet reached the age of contractual capacity. The age at which a
person achieves full contractual capacity is determined by state statute or constitutional
provision. (LawTeacher)

According to the Section 11 of the Contracts Act 1950 “every person is

competent to contract who is of the age of majority according to the law to which he is
subject, and who is of sound mind, and is not disqualified from contracting by any law to
which he is subject”. It means that the person who enters into the contract must have the
full capacity in terms of age and mind. For a contract to be valid, both parties must have
the legal capacity to do it. This means a person must have the ability to enter any contract
they wish to and fully understand its terms and obligations. If the other party did not have
the capacity, the contract will not be legally binding. A person below the age 18 years old
is a minor. In Malaysia, the age of majority is recognized as person above 18 years of age
as stated in the Age of Majority Act 1971: “The minority of all males and females at the
age of 18 years and every such male and female attaining that age shall be of the age of
majority.” (Itslaw, 2011)Any contracts made by minor are not considered as a valid
contract (Lee & Detta, 2009). The law governing minor’s contract is to protect children
from being exploited as they are inexperienced. Another principle is the law should not
cause suffering to the parties dealing with minor.
 In English Law, a contract made by a minor, subject to certain exceptions, is only
voidable at the option of the minor. In the case of Mohiri Bibi v. Dharmodas Ghose
(1903), Dharmodas Ghose, a minor, entered into a contract for borrowing a sum of Rs.
20,000 out of which the lender paid the minor a sum of Rs. 8,000. The minor executed
mortgage of property in favor of the lender. Subsequently, the minor sued for setting
aside the mortgage. The Privy Council had to ascertain the validity of the mortgage.
Under Section 7 of the Transfer of Property Act, every person competent to contract is
competent to mortgage. The Privy Council decided that Sections 10 and 11 of the
Indian Contracts Act make the minors contract void. The mortgagee prayed for refund
of Rs. 8,000 by the minor. The Privy Council further held that as a minor’s contract is
void, any money advanced to a minor cannot be recovered.

In the case of Tan Hee Juan v Teh Boon Keat (1934), plaintiff an infant
executed transfers of lands in favor of the defendant. The transfer were witnessed and
subsequently registered. Plaintiff applied to the court for an order setting aside the
transfers. The court held that the transfers are void and ordered the land to be restored to
the minor.

In effect of section 10 and 11 of Contracts Act 1950, the courts held in the cases
of Mohori Bibee V Dharmodas Ghose (1903) and Tan Hee Juan V Teh Boon Kiat
(1934) that all such agreements are void. Therefore, all contracts entered by a minor is
generally void and a minor cannot sue or be sued on such void contracts. In both cases,
the contract can be enforced by the minor although he would not normally be entitled to
obtain specific performance of the contract, but can only recover damages for breach.
This is because specific performance will not be granted by the court where it is not
prepared to enforce the contract at the suit of either party. Since the contract could not be
enforced against the minor, equity will not allow a minor to obtain specific performance
against the other party. In the United Kingdom, the Infants Relief Act 1874 has been
repealed by the minors’ Contracts Act 1987.

However, there are exceptions to this rule which is necessaries, scholarship,

insurance and marriage or divorcement. However, the validity of the contract only applies
if they are old enough to know the nature of transactions and its terms. A young child
who did not understand what he was agreeing is seen as having the lack of mental
capacity. Therefore, any contracts made by them are void. In Regina v Oldham
Metropolitan Borough Council(1993), it was held that contracts made by minor are
only valid if they are old enough to understand. Minors do have advantage in contracts as
they can terminate the contract before reaching the age of maturity. In Corpe v
Overton(1833), Minor agreed to enter into a partnership which would be formed in the
future, he paid a deposit which would be lost if he did not got through with it. He
repudiated the contract. The court held that the minor is entitled to have his deposit back
even though that he repudiated the agreement (Elliott & Quinn, 2007)

Under section 69 of Contracts Act 1950, it is said that “if a person, incapable of
entering into a contract, or anyone whom he is legally bound to support, is supplied by
another person with necessaries suited to his condition in life, the person who has
furnished such supplies is entitled to be reimbursed from the property of such incapable
person.” Necessaries are referred to as essentials in which it brings reasonable comfort
to the infant. However, the exceptions are only valid to basics necessities and luxurious
items are excluded. Normal clothing is not considered as necessaries if the infant already
own enough herself. In cases of Scarborough v Sturzaker(1905), a bicycle was a
necessary because the minor had only one and used it to travel to work. Sturzaker, a
minor, cycled 19 kilometers to work each day. He traded in his old bicycle to
Scarborough and made a part payment on a new one. Sturzaker repudiated the contract
and refused to pay the outstanding amount. The Tasmanian Court held that the bike was a
necessary. Therefore, the contract was enforceable and Sturzaker had to pay the money
owing. The classification of necessaries depends on the minor’s need and condition of his
life.

In the cases of Nash v Inman(1908), Nash was a tailor on Savile Row, entered
into a contract to supply Inman (a Cambridge undergraduate student) with, amongst other
things, 11 fancy waistcoats. Inman was a minor who was already adequately supplied
with clothes by his father. When Nash claimed the cost of these clothes Inman sought to
rely on lack of capacity and succeeded at first instance. The plaintiff argued that the
waistcoats were in the category of necessaries. As the defendant was already amply
supplied with clothing appropriate to his station in life the clothing purchased could not
amount to necessaries. An infant may contract for the supply at a reasonable price of
articles reasonably necessary for his support in his station in life if he has not already a
sufficient supply. To render an infant's contract for necessaries an enforceable contract
two conditions must be satisfied which the contract must be for goods reasonably
necessary for his support in his station in life, and he must not have already a sufficient
supply of these necessaries. The plaintiff was unable to enforce the contract. It should be
noted that necessaries is not confined to goods only but include services and other
necessaries. In Chapple v Cooper(1844) an undertaker sued a widow, who was a minor,
for the cost of her husband’s funeral. It was held that this was a necessary service, and so
the young woman was obliged to pay. Minor can be bound by contract if the goods and
services are considered necessary. Necessaries were described in such things without
which a person cannot reasonably exist. However, if the agreement contains unfair terms,
the minor are not to be bound even though it was a necessary in the case of Fawcett v
Smethurst (1914), a minor was held not to be bound by a contracts for the hire of a car,
even though it was a necessary service in this case, because the contract included a term
making him liable for damage to the car ‘in any event’ that is whether or not the damage
was his fault. Where there is a binding contract for necessaries, the minor is only bound
to pay a reasonable price for them, which need not to be the contract price.

In some instances, automobiles are considered necessaries. The minor’s and his or
her parents’ economic status can be considered in determining whether an item is
considered a necessary. Some courts will enforce the contract as originally written while
others may require the minor to pay the fair market value for the goods or services
provided. For example, if the minor exited the interstate during a torrential downpour and
the hotel was $150 for the night although the fair market value was $100, some courts
would impose the $150 price while others would impose the $100 price.

According to Section 4 (a) Contracts (Amendment) Act 1976, contract of

Scholarship between a minor and the government or non-governmental organizations is
also valid because the scholar is entering into such agreement is not of the age of majority.
In the case of Government of Malaysia v. Gurcharan Singh, government spent RM
11,500 for the defendant for his education purpose when he was a minor student. So, a
contract was made with the defendant. Later the defendant refused to pay back the money.
The court was held that the money given for education came under necessaries and
therefore the defendant was bound to pay back the money.

Under the Insurance Act 1972, an infant over the age of ten may enter into a
contract of insurance. However, if he is below the age of sixteen, he can only do so with
the written consent of his parents or guardian. A minor can enter contract and it is
voidable at his option. In Stapleton v Prudential Assurance Co(1928), the court held
that the contract made by minor was a continuing contract and the minor can refute it but
it was bound to do so within a reasonable time.

A minor may enter into a contract of marriage or divorcement as provided

by Section 4 (a) Age Majority Act 1971 said that “Nothing in this Act shall affect the
capacity of any person to act in the following matters, namely, marriage, divorce, dower
and adoption Therefore a minor may sue or be sued for a breach of promise to marry”.
Children are actually allowed to marry under existing Malaysian laws. The legal age to
marry also depends on whether you are Muslim or non-Muslim. Literature while
commenting the case of Rajeswary v Balakrrishnan (1958), agree with the court that
distinguished the case of Mohori Bibee on the fact that the contract in that case was a
business contract, not a contract to marry. The plaintiff in this case was a minor who had
entered into a contract to marry. The defendant had breached the contract and she sued
him for damages. This has enshrined the principle that a minor could not enter into a
valid contract. The case of Khimji Kuverji v Lalji Karamsi AIR 1941 Bom 129 was
also referred to and was applied in the case of Rajeswary. It was held in Rajeswary’s case
that a minor may enter into a valid contract to marry. It can be summarized that there is
no minimum age to marry under the Islamic law or in other words issue of child bride is
not an offence under the shariah law. Nevertheless the civil law carrys the same nature of
argument that does not categorize child marriage is an offence in Malaysia. Both Shariah
and Civil Law support that a marriage is similar to a civil contact yet they are different
when discussing on the liabilities of parties to each contract.
 Under the Law Reform (Marriage and Divorce) Act's Sections 10 and 12, non-
Muslims can only be legally married if they are aged at least 18 and will require parental
consent for marriage if they are still below 21. Under this law, they are considered minors
if they have yet to turn 21 and are not widows. As for Muslims, the minimum legal age
for marriage in the states' Islamic family laws is 18 and 16 for a male and female
respectively, but those below these ages can still marry if they get the consent of a
Shariah judge.

In conclusion, Based on the general rule in Mohori Bibee v Dharmodas Ghose,

it is clear that a contract entered by a minor is void. Minors are permitted to enter into
contracts for limited purposes, and the test is one that focuses on the nature of the
transaction, and whether the minor is of an age such that they capable of understanding it.
The law is protecting minors from making contract is try to avoid other people can take
the advantage of as they do not have the legal capacity to enter the contracts. However,
the general law states that contracts entered into by children that are for 'necessaries' are
binding on children, as those are for apprenticeship, employment, education and service
which is for the benefit of the child. Contracts for necessaries are for the supply of food,
medicines, accommodation, clothing, amongst other things but generally exclude
conveniences, and products and services for comfort or pleasure. Commercial or 'trading'
contracts are excluded. These latter contracts are voidable at the option of the minor, and
whether the minor may avoid the contract depends on the nature of the contract.
Sometimes this may lead to injustice situation for some of the business. To avoid this
unfair situation happen, we think that business man should not form a contract with a
minor as they have advantage to void the contract in their wish.
Question 2
Business entity in Malaysia

There are four different types of business structures in Malaysia. The types of
business structures are sole proprietorship, partnership, privated limited company, and
limited liabilitite partnership. Before we advise Kenny Chew and Dominic Ter which
entity to choose, we may need to explain each entity in details and further advise to
Kenny and Dominic

Sole Proprietorship

Sole proprietor is the simplest economic and legal unit. The business is owned
solely by one individual, where his liability is unlimited. The owner can be made
personally bankrupt for his business debt, if he chose to register as sole proprietor as
there is no separate between the business and his personal assets or obligations. (Sole
Proprietorship, 2017)

Sole proprietorship is it requires less paperwork and formalities in term of its

formation and registration. The registration is easier, faster and only few documents
needed compare to other structure. Apart from that, price of the entity formation is
cheaper so less modal needed to set up this kind of business. Besides that, sole
proprietorship is not required to disclose financial statement to the public. (Low, n.d.)

Partnership

Partnership is a relationship of two or more person carrying on a business in

common with a view to profit. Hence, Partnership must comprise of at least two members
and maximum of twenty members. Members of partnership shall not be more than 20
persons (Murray, 2017)Reference can be made to Section 14(3) (b) of the companies Act
which provides that:-

“(3) An association or partnership shall not be formed for the purpose of carrying on any
business which has for its object the acquisition of gain by the association or partnership
or the individual members thereof unless—
(a) it is an association or partnership formed for the purpose of carrying on any
profession or calling which is declared by the Minister to be a profession or calling
which is not customarily carried on by an association or partnership incorporated under
this Act;

(b) in the case of any other association or partnership, it consists of not more than twenty
members;

(c)it is incorporated under this Act; or

(d) it is formed in pursuance of some other written law or letters patent.”

Normally, there will be a partnership agreement exist between partners which

recorded the terms of the agreements between partners. Formation of partnership also
involved less formality. In case where no partnership agreement was signed between
partners, the relationship between partners and also third parties shall be governed by the
Partnership Act 2016. (Low, n.d.)

All partners in partnership are similar to sole proprietor in sole proprietor business
as they are entity liable for any losses the partnership business suffered. One of the
advantages of form a partnership is that partnership can be formed quickly and early
without any great legal formalities where it can be formed by signing a partnership
agreement. As it needed at least 2 or more members, the capital available will definitely
larger than a sole proprietorship. Besides that, for those who actually wanted to have
more control to the operation of the business partnership will be a good choice for them
as each partner can have a say in management of the business and can share profit, they
shared the burden of management together. (ZeePedia, n.d.)

In partnership business, partners bound to one another. They owe each other
fiduciary duties which they have to act in almost good faith. As partnership is often small,
it is an advantage to the business as the partners may be closer or response or act fast to
clients or customers. Similar to sole proprietor, partnership have more privacy as
partnership need not disclose their account to the public. Less cost needed to form a
partnership compare to companies. Partnership can be easily dissolved by mere consent
of its partners or by death or bankruptcy of its partner. (ZeePedia, n.d.)

However, there are disadvantages to this business structure also. As mentioned

earlier partners in partnership are liable to any debts occurred and they haven't unlimited
liability. Decisions of one partner are binding on all other partner problems may arise
when a poor decision was made. As mentioned earlier also partnership needed at least 2
or more members, there will be chances where partners hold different opinion which may
threaten the existence of the business. Apart from that, problem like inflexibility may
arise as partners always need to consult one another’s opinion on important matters.
Partnership can easily come to an end when one of the partners passed away or was
declared bankrupt according to the Partnership Act unless otherwise provided in the
Partnership Agreement (ZeePedia, n.d.) .

In the case Keith Spicer Ltd v Mansell [1970] 1 All ER 462, two individuals, X
and Y hoped to establish a restaurant. They intended to form a company for this purpose.
Prior to the company's formation and while they were looking for suitable
premises, X purchased furniture from a third party and had them delivered to Y’s
premises. The furniture was not paid for and the third party there upon sued Y on the
basis that he was in partnership with X. The court said there was no partnership as X and
Y were not carrying on business in common but were preparing to do so as a company.
Acts carried out in contemplation of a business being undertaken in the future did not
point to a partnership. Further, the holding of property jointly did not change things.
(Kiran, 2017)

Private Limited Company

Unlike sole proprietorship and partnership, a private limited company can only be
created by certain prescribed methods; it must be registered under the Companies Act
2016. Compare to partnership this is more troublesome as partnership can be created by
express or implied agreement of the partners. Formation of a company also incurs more
cost compare to the sole proprietorship and partnership. Members of company are not
entitled to take part in management of the company unless they are also directors of the
company. (Advanced Corporate Resources Sdn Bhd, n.d.)
 There are strict formalities to be followed and power and duties of members of
company are governed by the Companies Act 2016 and by its own constitution. In
partnership, there are less formalities as discuss earlier, partners may alter nature of
business by agreement and make their own arrangement while operating the business.
The account of a company must be available for public inspection which is different with
partnership and sole proprietor. As setting up a company is not easy to dissolve also the
same. (Asiacorp.asia, n.d.)

One of the biggest advantages of incorporation is that company has separate legal
entity from its members. Its members will not be personally liable or oblige for debts and
losses of the company. Apart from that, there is no restriction on number of members of
company. It can have either only one member or unlimited number of members. These
provide more flexibility compare to partnership which requires at least 2 members and
limited to only 20 members. Shares in a public company are transferable. Compare to
partnership, shares cannot be transferred without the consent of all the other partners.
(Asiacorp.asia, n.d.)

Apart from that, member of the company is not bound by the act of the others
members. This is difference with partnership which partner bound by act of all other
partners. A company can also create a floating charge which allows it to raise funds
without impeding its ability to deal with its assets. Unlike partnership and sole proprietor
who cannot creates a security over its assets. Shareholders of a company also allow
claiming from the company any debts owe by the company to the shareholders same as
other creditors. However, a partner in a partnership who owed money by the partnership
cannot claim payment in competition with other creditors. A company cannot normally
be wound up on the will of a member, upon death of its member, bankrupt and/or insanity
of its member. (Asiacorp.asia, n.d.)

Held in the case law of Salomon v Salomon & Co that a company is regarded as
a distinct legal entity with its members and management. In the case of Salomon v
Salomon & Co, Mr. Salomon was the proprietor of a small but successful leather business.
He had later incorporated his business as limited company in accordance with the
registration provision contained in the Companies Act 1862. The law also provides that 7
or more persons could incorporate a business provided that it was associated for a lawful
purpose. The 7 subscribers to A Salomon Ltd were Mr. Salomon, his wife and their 5
children. The incorporated company later bought Mr. Salomon’s business in a solvent
state for a consideration to the value of approximately 39,000 pound. Mr. Salomon
received 20 thousand fully paid up 1 pound shares, an issue of debentures to the value of
10 thousand pound. The debenture was secured against the assets of the company; by
means of floating charge. The remaining members of the family were each allotted one
pound share in the company. Unfortunately, A Salomon Ltd did not prosper. Mr. Saloon
debentures were transferred to a Mr. Broderip in return for a loan of 5000 pound. This
amount was then pumped back into the company by Mr. Salomon. Despite further efforts
on part of Mr. Salomon to keep the company afloat, less than a year after its
incorporation, the company had fallen into an insolvent state. The company could not
meet Broderip’s debentures interest payment and fearful that his investment would be lost,
Broderip sought to realize his security by appointing a receiver. The company which had
other creditors was subsequently put into liquidation. The liquidation of the company’s
assets realized sufficient funds to meet the company debts to Broderip but not the debts
owed to the company’s other creditors.
In this case although both High Court and Court of Appeal recognized that
A Salomon Ltd having complied with the registration provisions of the Companies Act
1862, was a corporate entity, they had not contemplate the fact the once incorporate the
company could not be considered as anything other than an independent entity, totally
distinct from its founder, Mr. Salomon.

LIMITED LIABILITY PARTNERSHIP

A limited liability partnership (LLP) is a type of business structure where two or

more partners incorporate a partnership entity that shields co-partners from liabilities due
to the willful misconduct or gross negligence of one partner or a group of partners. For a
limited liability partnership to exist there must always be two or more partners. Although
Malaysia’s Limited Liability Partnership Act of 2012 does not restrict the benefit of
limited liability partnership structure to certain classes of professionals only, in practice,
limited liability partnership structure makes the most sense for chartered professions only,
such as lawyers and accountants when two or more such professionals decide to work
together. (Wikipedia, 2008)

A limited liability partnership is registered with SSM of Malaysia. Foreign

individuals must appoint a professional services firm to handle the registration process.
Even for locals, it is suggested to engage a professional services firm for limited liability
partnership’s registration including drafting the partnership agreement. The limited
liability partnership registration process consists of two steps, which are name reservation
and registration of the entity. Under normal circumstances, a limited liability partnership
registration can be completed in a single day. (Mr.Stingy, 2015)

A limited liability partnership is required to keep an up-to-date book of accounts

so as to substantiate all the transactions and financial position of the limited liability
partnership. Accounting and other financial records need to be maintained for 7
consecutive years. (Mansor, 2013)

The manager of a limited liability partnership must submit to the Registrar an

annual declaration of solvency or insolvency; such declaration must be lodged within the
first 15 months from the date of the registration of the limited liability partnership.
Subsequently a declaration once in every calendar year must be submitted at intervals of
not more than 15 months. (Mansor, 2013)

Advantage of Limited Liability Partnership

Limited liability partnership can have their limited personal liability. A limited
liability partnership is rendered a separate legal identity in Malaysia. Thus, a limited
liability partnership can own property, sue or be sued. The partners of the limited liability
partnership will not be held personally liable for any business debts incurred by the
limited liability partnership or wrongful acts of another partner. A partner may, however,
be held personally liable for claims from losses resulting from his own wrongful act or
omission. (Mansor, 2013)
 Next, it can lead to perpetual succession. Any changes in the limited liability
partnership, for example, resignation or death of partners does not affect its existence,
rights or liabilities.

Then, limited liability partnership also can be easily to compliance with.

Compliance requirement are more complex than sole proprietorship but simpler than a
private limited company. Limited liability partnership is required to keep its books up-to-
date so as to substantiate all the transactions and financial position of the limited liability
partnership, failure to do so may lead to prosecution and penalties. A limited liability
partnership in Malaysia is not required to file its accounts or have them audited. Nor does
it need to disclose its capital.

Disadvantage of Limited Liability Partnership

Limited liability partnership requires a minimum of 2 partners at all times.

However, there is no cap on the maximum number of partners in a limited liability
partnership. The partners can be natural persons or companies. A partner may cease to be
a partner upon his death or dissolution or in accordance with the limited liability
partnership or, in the absence of such agreement, by giving 30 days’ notice to the other
partners. A proposed new partner requires the content of all existing partners. Other
matters are decided by majority vote, with each partner having one vote. Limited liability
partnership in Malaysia does not have directors, shareholders or secretary; instead the
partners own and run the business. (Mansor, 2013)

Moreover, individual partners can commit the partnership to formal business

agreements without the consent of the other partners. It also lacks the ease of ownership
transfer and investment that a company structure provides.

Furthermore, limited liability partnership has no corporate tax benefits. Tax

exemptions available to private limited companies are not available to limited liability
partnerships. Limited liability partnership is treated tax transparent which means a limited
liability partnership is not taxed as an entity. Instead each partner is taxed on their share
of the profits as per the personal income tax rate. When a partner is a company, its share
of income from the limited liability partnership will be taxed on the tax rate for
companies.

Cases Related to Limited Liability Partnership

Limited Liability of Partners (Miller, 2011)

Henry v. Masson

Henry and Masson were partners in an orthopedic surgery practice. They formed their
practice as an LLP in 2001, and personal dispute led to litigation in 2003. During a
hearing in the case, they agreed in principle to wind up the LLP and sever all ties between
them. Additional disputes and issues arose, and another suit was filed. In an attempt to
resolve all their differences, they executed a settlement agreement. Litigation ensued over
alleged breaches of the settlement agreement. Among the issues addressed in this appeal
was a claim by Masson that the trial court erred in ordering Henry and Masson to make
capital contributions to the partnership to allow the partnership to pay out fund it had
taken in that actually belonged to two new entities formed by the parties. Masson based
his argument on the act that the partnership was a LLP and the provision of the Texas
Revised Partnership Act providing that partners in a LLP are protected from individual
liability for debts and obligations of the partnership incurred while the partnership is a
LLP. The court stated that neither the partnership agreement nor the statute prevented the
trial court from ordering contributions to the partnership during winding up. According to
the court, the payments the trial court ordered Henry and Masson to make were capital
contributions to discharge debts of the partnership during winding up, not an adjudication
of individual liability for the debts or obligations as contemplated by the statute. The
court relied upon the partnership agreement, which provided that if no partner agreed to
lend funds needed to discharge the partnership’s debts, obligations, and liabilities as they
came due, each partner was required to timely contribute the partner’s proportionate
share of funds needed. Masson argued that this provision was not intended to apply in the
winding up process and the reference in partnership agreement to payment of the
partnership’s debts upon dissolution “to the extent funds are available” evidenced the
partners’ intent that they would not require to make additional capital contributions
during the winding up. The court stated that the phrase relied upon by Masson appeared
in a section referring to steps to be taken after sale of the partnership property, and the
funds mentioned are funds received from the sale of partnership property. The court did
not interpret the agreement to mean that sale of partnership property was the only source
of funds to pay debts. The court also rejected Masson’s argument that the reference in the
capital contribution provision to payment o debts as they become “due and payable” was
evidence that the parties did not intend to require capital contributions during winding up.
The court stated that “due and payable” simply modified the type o debt to be paid and
did not limit the provision to “operational” status of the partnership.

In conclusion, the best business entity we advise to them is limited liabilities

partnership. Both Kenny and Dominic are carrying professional skill which Kenny carry
a lot of experienced in sales and Dominic has skill of web design and account knowledge.
As we mention above, limited liability partnership structure makes the most sense for
chartered professions only, such as lawyers and accountants when two or more such
professionals decide to work together. Another reason is the liability of each partner is
limited to his or her share as written in the agreement filed at the time of creation of
limited liabilities partnership. It means the liabilities of Kenny and Dominic is limited as
it creates the liability protection to the partner. The partner are also not be liable for the
act of each other and can held liable only for their own acts as compared to partnership
where they can held liable for the acts of their partners as well. It will be more secure for
the partner even though they are really close friend. As the personality of a person is
unexpected and the temptation of money will lead them involve in the crime. There is
also the restriction and compliance is enforced in limited liabilities partnership by the
government as compared to the restrictions enforced on a private limited company. The
limited liabilities partnership is best suit to Kenny and Dominic if they willing to operate
their business in long term,
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