Final answer:
Limited partners are typically not allowed to participate in the management of the LLP, while general partners have the authority for decision-making. Limited partners have limited liability for the partnership's obligations.
Step-by-step explanation:
In a limited liability partnership (LLP), limited partners are typically not allowed to participate in the management of the LLP. The management and decision-making authority generally lies with the general partners.
Limited partners, on the other hand, have limited liability for the debts and obligations of the partnership.
For example, let's say Tom and Jerry form an LLP. Tom contributes a significant amount of capital and is actively involved in running the business as a general partner, while Jerry invests capital but does not participate in management as a limited partner.
If the business fails and incurs debts, Tom would be personally liable for the debts as he actively managed the business, while Jerry's liability would be limited to his investment as a limited partner.
So, in summary, limited partners are not typically involved in the management of the LLP, but they benefit from limited liability for the partnership's obligations.