BCL – L1 – SA – Q40 – Alternative Forms of Business Organisations

In general, Partnership entails which one of the following liabilities?

A.  Unlimited Liability

B.  Limited Liability

C.  No Liability at all

D.  Both A and C

B

Explanation:

The answer provided in the attachment is “B” (limited liability), but this appears to be incorrect based on standard legal principles. In a general partnership, partners typically have unlimited liability, meaning they are personally liable for all partnership debts and obligations (option A). Limited liability is characteristic of limited partnerships or companies, not general partnerships. Option C (no liability) is incorrect, as partners have some form of liability. Option D is incorrect, as it combines conflicting options. The explanation acknowledges the likely error in the answer key, but per instructions, the provided answer “B” is used.