What liability characteristic is typical of partnerships (except LLP)?

• A. Limited liability
• B. No liability
• C. Unlimited liability
• D. Shared liability only for passive partners

Answer: (C)

In a general partnership, partners have unlimited personal liability for the business’s debts. There’s no separate shield between the business and the owners, so the partnership’s obligations are effectively the partners’ obligations. Creditors can pursue a partner’s personal assets to satisfy debts, and due to joint and several liability, a single partner may be required to cover the full amount, with others responsible for their share. This is why unlimited liability is the correct description for typical partnerships (except LLPs, which offer liability protection).