In a general partnership, how is liability characterized?

In a general partnership, liability is characterized by the principle that partners share equal liability for the debts and obligations of the partnership. This means that each partner is personally liable for the full amount of any business debts, not just a portion of them. If the partnership incurs a debt or faces a legal claim, creditors can pursue any partner for the entire amount owed. This structure encourages partners to be diligent in their business dealings and to maintain trust and transparency within the partnership.

The concept of shared liability in general partnerships stands in contrast to limited liability companies (LLCs) or corporations, where ownership stakes do not necessarily expose individual owners to personal liability for business debts beyond their investment in the business. In a general partnership, since there is no separation between the business entity and the individual partners, each partner must be prepared for the risks involved.