What liability do partners have in a general partnership?

In a general partnership, partners have unlimited liability, which means that each partner is personally responsible for the debts and obligations of the partnership. This characteristic of general partnerships is significant because it affects the partners' personal assets; if the partnership cannot meet its financial obligations, creditors can pursue the personal assets of any partner, not just the assets of the business itself.

This concept of unlimited liability reinforces the notion that partners in a general partnership are fully committed to the risks associated with the business. Each partner's liability is not limited to their investment in the business but extends beyond it to their personal financial resources.

Understanding this liability structure is crucial for anyone involved in or considering entering a general partnership, as it highlights the importance of establishing trust and a sound partnership agreement to delineate responsibilities and decision-making processes.