You and your friends consider forming a consulting partnership. If you form the business as a partnership, each partner has personal liability for all the contacts and torts of the partnership. If you form the business as an LLP, in general you and the other partners have no liability for partnership obligations beyond the assets of the LLP, that is, beyond each partners equity interest in the business.

As your form of business, will you choose the partnership or LLP?

Is it ethical to be an LLP partner and to have liability limited to your equity interest in the LLP? Would a profit maximizer find it ethical to form an LLP? Would a utilitarian or rights theorist find it ethical?

Suppose that a bank knows the business is an LLP, lends money to the LLP, but does not obtain the LLP partners individual promises to repay the loan. Is it ethical that the LLP partners are not liable to the bank on the loan if the LLPs assets are insufficient to repay the loan?