Sections 26 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 26 makes every partner an agent of the LLP, and only of the LLP. Section 27 then says when the LLP is bound by what a partner does, when it is liable for a partner's wrongful act, and that the LLP's obligations are met out of the LLP's own property. For anyone dealing with an LLP, or running one, these two sections decide who is bound by a signature. If you want a second opinion on an authority question in your own LLP, our legal consultation team can look at the LLP agreement with you.
Every partner is the agent of the LLP for the purpose of its business, but not the agent of the other partners (s.26). The LLP is not bound by a partner's act only if both conditions in s.27(1) are met: the partner had no actual authority, and the other person knew this or did not know or believe him to be a partner. The LLP is liable for a partner's wrongful act or omission in the course of its business or with its authority (s.27(2)). Its obligations are solely its own and are met out of its property (s.27(3) and (4)).
Section 26 at a glance
Section 26 is a single sentence. Every partner of an LLP is, for the purpose of the business of the LLP, the agent of the LLP, but not of other partners.
This is the main difference from an ordinary partnership, where partners are agents of each other and of the firm. In an LLP, a partner's acts are attributed to the LLP, not to the co-partners personally. That is why the next sections can limit what each partner is personally answerable for. See section 28.
Section 27(1): when the LLP is not bound
The LLP is not bound by anything done by a partner in dealing with a person if two things are both true:
| Condition | What it says |
|---|---|
| 27(1)(a) | The partner in fact has no authority to act for the LLP in doing that particular act |
| 27(1)(b) | The other person knows that he has no authority, or does not know or believe him to be a partner of the LLP |
The word between the two clauses is "and". Lack of authority alone is not enough. Take a partner who has no authority to sign a loan agreement, but who signs it for the LLP before a bank that has no reason to doubt his authority. Clause (a) is met, clause (b) is not, so the protection in 27(1) is not available to the LLP on those facts. The text does not say anything further about such a case, so the rights of the bank and the LLP would turn on the rest of the Act, the LLP agreement and general law.
Clause (b) has two limbs. The LLP is protected if the outsider knew the partner lacked authority. It is also protected if the outsider did not know or believe the person to be a partner at all, for example a stranger who deals with someone he never took for a partner.
Where authority comes from. Section 27 does not list what a partner may do. The mutual rights and duties of partners, and the LLP and its partners, are governed by the LLP agreement under s.23. The First Schedule supplies default rules where there is no agreement; see our article on section 23.
Section 27(2): liability for a partner's wrongful act
The LLP is liable if a partner is liable to any person as a result of a wrongful act or omission on his part in the course of the business of the LLP or with its authority.
Two points follow from the wording:
- The test is the course of the business or the LLP's authority. A wrong done in the course of LLP business is within the sub-section even if the LLP did not specifically approve it.
- The sub-section makes the LLP liable alongside the partner. It does not, by itself, remove the partner's own responsibility for his own wrong; that is dealt with in section 28(2).
Example. Anita Verma, a partner in Verma & Rao LLP, gives a client wrong advice while handling the client's account as part of the LLP's business. The client suffers a loss. Under s.27(2), the LLP is liable because Anita is liable for a wrongful act in the course of the LLP's business. Her co-partner, Sunil Rao, is not made liable merely because he is a partner (see s.28).
Section 27(3) and (4): the LLP's own obligations
(3) An obligation of the LLP, "whether arising in contract or otherwise", is solely the obligation of the LLP.
(4) The liabilities of the LLP shall be met out of the property of the LLP.
Together these two sub-sections state the idea of limited liability in the Act. A supplier's claim for unpaid goods, a landlord's claim for rent, a tax or statutory dues claim, whichever is an obligation of the LLP, is a claim against the LLP and its property. The text of s.27(4) does not name any partner's assets as a source of payment. Contribution obligations in the LLP agreement are separate; see sections 32–33. Fraud takes the matter outside this protection; see section 30.
How the three ideas fit
| Question | Section | Answer in one line |
|---|---|---|
| Whose agent is a partner? | 26 | The LLP's, not the other partners' |
| Is the LLP bound by an unauthorised act? | 27(1) | Not bound only if no authority and the outsider knew or did not take him for a partner |
| Is the LLP liable for a partner's wrong? | 27(2) | Yes, if in the course of its business or with its authority |
| Who pays an LLP debt? | 27(3), (4) | The LLP, out of its property |
Practical steps for LLPs
- Record in the LLP agreement who may sign what, and up to what value.
- Tell banks, landlords and major suppliers in writing which partners may sign. An outsider who knows a partner lacks authority cannot hold the LLP to that act under 27(1).
- Do not let a person act as a partner without being one; see section 29.
- Keep authority limits in board-style written resolutions of partners, so that the lack of authority can be shown.
Need help with partner authority in your LLP?
If a partner has signed something beyond his remit, or you are drafting limits for a new LLP agreement, it is worth getting the facts and the documents reviewed before a dispute arises. Our legal consultation service can read your LLP agreement and tell you where authority is clear and where it is not.
Key takeaways
- A partner is the agent of the LLP, not of the other partners (s.26).
- The LLP is not bound by a partner's act only if he had no actual authority and the outsider knew this or did not know or believe him to be a partner (s.27(1)).
- The LLP is liable for a partner's wrongful act or omission done in the course of its business or with its authority (s.27(2)).
- An LLP's obligations are solely its own and are met out of its property (s.27(3) and (4)).
- Fraud and a partner's own wrong are dealt with in sections 28 and 30.
Read next
- Section 28: extent of liability of a partner
- Section 29: holding out
- Extent of liability of LLP and partners
- Nature of LLP: body corporate with limited liability
Disclaimer: Based on the Limited Liability Partnership Act, 2008 as amended by the Limited Liability Partnership (Amendment) Act, 2021, as consulted on 1 October 2026. Forms, fees and procedure are set by the LLP Rules, 2009 as amended from time to time. This article is general information, not legal advice; check the official text before acting.