Question

Terrance and Barbara created a limited partnership, but they failed to comply with the requirements of the limited partnership. Therefore what will be the liability of the partners?

Answer 1

Answer:

The partners will have unlimited liability.

Explanation:

Limited partnership is a form of partnership in which two or more people share ownership of a business. The existence of two types of partners is an essential requirement for a limited partnership. These two partners include:

1) General partner.

2) Limited partner.

-General partners are the partners that are fully involved in the daily management of the business. They are solely in charge of decision making process in the company, general partners are also liable for the debts incurred in the business.

-Limited partners are not involved in the daily management of the company, they only participate by investing money into the business and as such they are prohibited from making any type of decision in the organization.