In a limited partnership, which partner has limited liability?

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Multiple Choice

In a limited partnership, which partner has limited liability?

In a limited partnership, liability protection is tied to the role. The general partner runs the business and has unlimited personal liability for the partnership’s debts, so their personal assets can be at risk. The limited partner contributes capital and has liability limited to the amount invested, staying passive in management. This limited liability shields their personal assets, subject to typical exceptions like fraud or personal guarantees. If a limited partner becomes actively involved in management, they can jeopardize that protection and be treated like a general partner with unlimited liability. So, the partner with limited liability is the limited partner.

In a limited partnership, liability protection is tied to the role. The general partner runs the business and has unlimited personal liability for the partnership’s debts, so their personal assets can be at risk. The limited partner contributes capital and has liability limited to the amount invested, staying passive in management. This limited liability shields their personal assets, subject to typical exceptions like fraud or personal guarantees. If a limited partner becomes actively involved in management, they can jeopardize that protection and be treated like a general partner with unlimited liability. So, the partner with limited liability is the limited partner.

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