A partnership is a relation between two or more persons gathered for a common object. Generally the object of the partnership is to gain profit from a business. A partnership can be general partnership of limited liability partnership. To Indicate: the meaning of term “unlimited liability” for partnership members. A partnership can be general partnership or a limited liability partnership. In case of a general partnership, the partners have unlimited liability but in case of a limited liability partnership, the liability of partners is limited to the amounts contributed by them in the partnership. In case of a general partnership, a partner has unlimited liability for the partnership. The personal assets of a general partner can be used to pay off the partnership debts. In case of a limited liability partnership, a partner is liable to the extent of the capital amount contributed by him in the partnership. The personal assets of a limited liability partner’s cannot be used to pay off the partnership debts. Hence the term “unlimited liability” indicates the liability of a partner in case of a general partnership.

8th Edition

ISBN: 9781259662966

Author: John J Wild

Publisher: McGraw-Hill Education

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