In cases of partner misconduct, Section 401(c) sets forth a partnership's obligation to indemnify the culpable partner where the partner's liability was incurred in the ordinary course of the partnership's business. When indemnification occurs, the assets of both the partnership and the culpable partner are available to a creditor. However, Sections 306(c), 401(b), and 807(b) make clear that a partner who is not otherwise liable under Section 306(c) is not obligated to contribute assets to the partnership in excess of agreed contributions to share the loss with the culpable partner. (See Comments to Sections 401(b) and 807(b). regarding a slight variation in the context of priority of payment of partnership obligations.) Accordingly, Section 306(c) makes clear that an innocent partner is not personally liable for specified partnership obligations, directly or indirectly, by way of contribution or otherwise.

Although the liability shield protections of Section 306(c) may be modified in part or in full in a partnership agreement (and by way of private contractual guarantees), the modifications must constitute an intentional waiver of the liability protections. See Sections 103(b), 104(a), and 902(b). Since the mere act of filing a statement of qualification reflects the assumption that the partners intend to modify the otherwise applicable partner liability rules, the final sentence of subsection (c) makes clear that the filing negates inconsistent aspects of the partnership agreement that existed immediately before the vote to approve becoming a limited liability partnership. The negation only applies to a partner's personal liability for future partnership obligations. The filing however has no effect as to previously created partner obligations to the partnership in the form of specific capital contribution requirements.

Inter se contribution agreements may erode part or all of the effects of the liability shield. For example, Section 807(f) provides that an assignee for the benefit of creditors of a partnership or a partner may enforce a partner's obligation to contribute to the partnership. The ultimate effect of such contribution obligations may make each partner jointly and severally liable for all partnership obligations - even those incurred while the partnership is a limited liability partnership. Although the final sentence of subsection (c) negates such provisions existing before a statement of qualification is filed, it will have no effect on any amendments to the partnership agreement after the statement is filed.